On the upward sloping portion of a firm's long-run average cost curve, it is experiencing
A. diseconomies of scale.
B. diminishing marginal returns.
C. economies of scale.
D. constant returns to scale.
Answer: A
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Refer to Figure 10-1. Which of the following is consistent with the graph depicted above?
A) Technological change increases the profitability of new investment. B) Households become spendthrifts and begin to save less. C) An expected recession decreases the profitability of new investment. D) The government runs a budget surplus.
As prices rise, people will buy fewer goods and services because:
A. the interest rate has declined. B. aggregate demand has increased. C. the purchasing power of the fixed quantity of money has declined. D. the income of households has increased.
Open Market operations consist mainly of ________
A) the government buying and selling private securities in the open market B) the Fed buying and selling government securities in the open market C) the government selling its own securities in the open market D) the Fed setting rates for securities traded in the open market E) none of the above
Assume a reserve requirement of 10 percent. A commercial bank has total reserves of $100,000, excess reserves of $25,000, and total checkable deposits outstanding of $750,000. If the reserve requirement were increased to 15 percent,
a. total expansion of the money supply would be limited to $750,000. b. excess reserves would be decreased to $12,500. c. the bank would have no alternative but to decrease its check able deposits. d. the bank would be $12,500 short of required reserves.