If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then:
A. it is encountering economies of scale.
B. the law of diminishing returns is taking hold.
C. it is encountering diseconomies of scale.
D. the firm's long-run ATC curve will be rising.
Answer: A
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Under a fixed exchange rate system, an expansionary fiscal policy is
A) more effective in an open economy than in a closed economy. B) less effective in an open economy than in a closed economy. C) equally effective in an open economy and in a closed economy. D) marginally effective in an open economy and completely ineffective in a closed economy.
In a market where the equilibrium price is $7, any price lower than $7 would cause
a. a balanced demand and supply b. an excess supply c. an excess demand d. none of the above
Identify three government policies that discourage saving
Suppose the economy has an inverted yield curve. According to the expectations hypothesis, which of the following interpretations could be used to explain this?
A. The term spread is positive. B. Investors prefer bonds with less interest-rate risk. C. Investors prefer bonds with less default risk. D. Interest rates are expected to fall in the future