If long-run average total cost decreases as the quantity of output increases, the firm is experiencing
a. economies of scale.
b. diseconomies of scale.
c. coordination problems arising from the large size of the firm.
d. fixed costs greatly exceeding variable costs.
a
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Explain how positive externalities cause a wedge between private marginal costs and social marginal costs. Give an example of a positive externality and explain why it is, in fact, a positive externality. Draw a supply/demand diagram and add a social marginal cost curve that represents the presence of the positive externality. Explain the relationship between the equilibrium quantity and that which is socially efficient.
What will be an ideal response?
If the real interest rate increases
A. there will be a movement upward along the investment demand curve. B. the investment demand curve will shift to the left. C. the investment demand curve will shift to the right. D. there will be a movement downward along the investment demand curve.
Consider a general cost function C(q), with Average Cost=C(q)/q. Prove using calculus that the quantity which minimizes the Average Cost function is also at the point where the Marginal Cost equals the Average Cost
To do this, first derive the necessary condition for the AC to be at a minimum.
When one strategy is always the best for a player to choose, regardless of what other players do, it is called:
A. collusion. B. the prisoner's dilemma. C. a Nash equilibrium. D. a dominant strategy.