Refer to Figure 8.7. Which of the following statements is true?
A. The technology represented in graph A will cause the firm to experience diseconomies of scale.
B. The technology represented in graph B will cause the firm to experience diseconomies of scale.
C. The technology represented in graph B will cause the firm to experience economies of scale.
D. The technology represented in graph C will cause the firm to experience diseconomies of scale.
D. The technology represented in graph C will cause the firm to experience diseconomies of scale.
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Suppose capital and labor are perfect substitutes resulting in a production function of q = K + L. That is, the isoquants are straight lines with a slope of -1
Derive the long-run total cost function TC = C(q) when the wage rate is w and the rental rate on capital is r.
In the short run, if price is below AC, maximizing profits really means minimizing total losses.
Answer the following statement true (T) or false (F)
In the long-run equilibrium for a monopolistically competitive firm, price:
A. exceeds marginal cost. B. is equal to marginal revenue. C. is equal to marginal cost. D. exceeds average total cost.
Mutual interdependence means that each firm in an oligopolistic industry:
A. considers the reactions of its rivals when it determines its price policy. B. makes a product identical to those produced by its rivals. C. faces a perfectly inelastic demand for its product. D. makes a product similar but not identical to those produced by its rivals.