Explain how a firm can have constant returns to scale in production and economies of scale in cost
What will be an ideal response?
A firm can have constant returns to scale in production at every output level. If the firm doubled all inputs the output would double. However, the firm may also more than double one input and double its output. Therefore in this way, as output doubles, the total cost might be less than doubling, resulting in a decreasing average cost, which is known as economies of scale.
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Considering the tax and transfer system in the United States, the poor receive
A) less in benefits than they pay in taxes, and so do the rich. B) more in benefits than they pay in taxes, and so do the rich. C) less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes. D) more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes.
Empirical evidence suggests that more digital cameras are being sold today than one year ago, and the selling price has decreased. The probable reason for this could have been an increase in supply
a. True b. False Indicate whether the statement is true or false
Banks that are managed in a very safe and conservative manner can be expected to earn
a. high, steady profits. b. high but volatile profits. c. low and consistent profits. d. low profits with occasional major losses.
Refer to the accompanying figure. If this economy were currently operating at point D, then in order to make more movies:
A. the first productive resources to switch to making movies should be those with the lowest opportunity cost of making milk. B. the first productive resources to switch to making movies should be those with the highest opportunity cost of making milk. C. no productive resources would need to switch from making milk to movies because each resource should continue to be used according to its comparative advantage. D. no productive resources would need to switch from making milk to movies because point D is already efficient.