Describe the shape of the LRATC curve and what causes it to change.
What will be an ideal response?
It is a U shape. At the beginning of the curve, at low output, average costs are high due to an inability to spread the cost of fixed inputs. The curve turns downward as output increases, enabling a firm to benefit from economies of scale such as specialization and buying power. The curve turns upward again at high levels of output because all economies of scale have already been realized and now the organization’s size makes it more difficult to manage.
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We know that the minimum wage causes unemployment. So, why does the government impose one?
What will be an ideal response?
The Smoot-Hawley Tariff
A) raised average tariff rates by over 50 percent in the United States in 1930. B) was passed by the U.S. Congress following the Civil War as a means of increasing government revenue. C) was passed by the U.S. Congress upon a recommendation made by the General Agreement on Tariffs and Trade (GATT) in 1948. D) lowered U.S. tariffs by 50 percent following World War II.
Explain why (holding interest rates constant), a rise in the expected depreciation in a country's currency leads to depreciation of that currency today
What will be an ideal response?
If a life insurance company does NOT require a medical exam of its policyholders, it is most likely that the company
A) charges above-average premiums. B) charges below-average premiums. C) charges no premiums. D) has only very healthy policyholders.