Assuming the existence of economies of scale, if a firm finds that it can reduce its unit cost by decreasing its scale of production, it means that
A) it has too much production capacity relative to its demand.
B) it should try to produce less.
C) the law of diminishing returns has not taken effect.
D) it has too much fixed overhead relative to its variable cost.
A
You might also like to view...
Refer to Table 1-5. Using marginal analysis, how many hours should Julius extend his shop's hours of operations?
A) 2 hours B) 3 hours C) 4 hours D) 5 hours E) 6 hours
The main proponent of monetarism has been ______________.
Fill in the blank(s) with the appropriate word(s).
Assuming the most typical shapes of the demand and supply curves, which of the following could lead to an increase in the current equilibrium price for personal computers?
a. a decrease is the price of computer chips b. a decrease in buyers' incomes, assuming that computers are a normal good c. a technological improvement that reduces manufacturing costs d. expectations of a higher future price e. an increase in the price of computer software
A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?
A. Raise price and lower output. B. Lower price and lower output. C. Raise price and raise output. D. Lower price and raise output.