Diseconomies of scale occur when:
a. long-run average total cost decreases with an increase in output
b. long-run average total cost increases with an increase in output.
c. long-run average total cost remains constant with an increase in output.
d. long-run average variable cost decreases with an increase in output.
b
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Consider a firm with constant marginal cost that behaves competitively. A horizontal merger lowers the firm's marginal cost and causes the firm to behave like a monopoly. How does the merger affect producer's surplus, consumers' surplus, and social gain? Explain.
What will be an ideal response?
Using the HO model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor intensive, it would be reasonable to expect the United States to
A) specialize completely in soybean production. B) specialize completely in avocado production. C) increase soybean production, but still produce some avocados. D) increase avocado production, but still produce some soybeans.
Budget deficits are inflationary when
A. the Federal Reserve contracts the money supply. B. the economy has lots of slack and the aggregate supply curve is horizontal. C. the economy is at full employment and the aggregate supply curve is vertical. D. private citizens buy the bonds to finance the debt.
Why might many R&D expenditures be affordable, but not worthwhile? Are outcomes from R&D guaranteed?
What will be an ideal response?