A firm scaled down its operation by reducing all inputs by 50% and experienced a less-than-50% decrease in output. If all input prices remain unchanged, the firm's long-run average cost exhibits:
A. economies of scale at the current output level.
B. diseconomies of scale at the current output level.
C. a constant long-run average cost at the current output level.
D. diminishing marginal returns at the current output level.
Answer: B
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Which of the following is a difference between a binding and a not binding price ceiling?
a. A binding price ceiling causes a shortage in the market, while a not binding price ceiling causes a surplus in the market. b. A binding price ceiling causes a surplus in the market, while a not binding price ceiling causes a shortage in the market. c. A binding price ceiling causes a shortage in the market, while a not binding price ceiling does not affect market behavior. d. A binding price ceiling causes a surplus in the market, while a not binding price ceiling does not affect market behavior.
Explain the practice of resale price maintenance and discuss why it is controversial
The principle of comparative advantage implies that
A. most people are harmed by trade. B. we should limit the extent to which people specialize. C. only wealthy countries ultimately can benefit from international trade. D. every country can benefit from international trade.
Which of the following would result in a decrease in demand for BMW automobiles?
A. An increase in the price of BMW automobiles B. A decrease in the price of BMW automobiles C. A decrease in the price of Mercedes Benz automobiles D. An increase in the price of Mercedes Benz automobiles