Economies of scale refers to when:
A. average total cost does not depend on the quantity of output in the long run.
B. an increase in the quantity of output increases average total cost in the long run.
C. an increase in the quantity of output decreases average total cost in the long run.
D. None of these is true.
Answer: C
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Juanita quit her job to move to Santa Fe to be closer to her family. She is actively looking for a new job in Santa Fe. Juanita is considered
A) frictionally unemployed. B) structurally unemployed. C) not to be unemployed. D) cyclically unemployed.
The costs of pollution abatement
A) increase at an increasing rate with the increase in pollution abatement. B) increase at a decreasing rate with the increase in pollution abatement. C) decrease at an increasing rate with the increase in pollution abatement. D) decrease at a decreasing rate with the increase in pollution abatement.
An economic boom that creates an inflationary gap is usually followed later by
A. falling prices. B. a period of stagflation. C. an increase of potential GDP. D. an increase in aggregate supply.