What are economies of scale? What are diseconomies of scale?
What will be an ideal response?
Economies of scale occur when a firm's long-run average costs fall as it increases output. Diseconomies of scale occur when a firm's long-run average costs rise as the firm increases output.
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The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, there is
A) a shortage of 3,000 units of rental housing. B) a shortage of 6,000 units of rental housing. C) a surplus of 3,000 units of rental housing. D) neither a shortage nor a surplus of rental housing.
Constant returns to scale (CRS) implies ________
A) constant returns to labor B) constant returns to capital C) increasing marginal products D) variable total factor productivity E) diminishing marginal products
What does a production possibilities curve show?
a. the amount of goods and services that all groups together want to purchase in a given period b. the difference between the actual distribution of income and perfect equality c. the inverse relationship between production and quantity demanded d. the potential total output combinations of any two goods for an economy in a given period
Assuming that generic brands are inferior goods, an increase in consumer income, other things being equal, will cause a(n):
A. leftward shift in the demand curve for generic goods. B. downward movement along the demand curve for generic goods. C. rightward shift in the demand curve for generic goods. D. upward movement along the demand curve for generic goods.