Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?
Economies of scale exist when a firm increases its scale of operations and lower per unit costs of production are experienced. Diseconomies of scale exist when a firm increases its scale of operations and higher per unit costs of production are experienced. If economies of scale are extensive we would expect to find a small number of very large firms operating within the industry. Conversely, if diseconomies of scale set in relatively early, we would expect to find a large number of relatively small firms operating within the industry.
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The textbook says that which of the following is among the key forces shaping today's economy?
A. Political scandals B. Globalization C. Increasing income inequality D. Government regulations
If a firm in a perfectly competitive market faces the cost curves in the graph shown and observes a market price of $10, the firm:
A. can make positive profits by producing where MC = MR. B. cannot make positive profits and should shut down in the short run. C. can make positive profits by producing more than 43 units. D. should continue to operate in the short run, but plan to exit in the long run.
Figure 7.6 shows prices, demands, and cost data for the only restaurant in a small town. Which group's demand for meals is more price-elastic?
A. the senior customers B. the non-senior customers C. the two groups are equally sensitive to a change in price D. There is not sufficient information.
Economic growth can be depicted as a
A) shift in the contract curve. B) a change in the dimensions of the Edgeworth box. C) a change in the preference curves of individuals. D) a change in the number of people in the Edgeworth box.