Imagine that a firm expands the size of its plant, doubling its total cost of production but more than doubling its output. This situation is known as
A. a violation of the law of diminishing returns.
B. economies of scale.
C. constant returns to scale.
D. diseconomies of scale.
Answer: B
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The cab fare in Horseville is regulated. Recently, the government decided to raise it from $2.00 to $2.50 per ride. After this rise in fare, cab ridership decreased by 10 percent
a) What is the price elasticity of demand for cab rides in Horseville? (Use the midpoint formula to calculate the percentage change in the price.) Is the demand for rides elastic or inelastic? b) According to your estimate, what happened to the cab drivers' revenue after the fare rose? Explain. c) Why might your estimate of elasticity be inaccurate?
Capital deepening occurs when
a. the capital stock increases for a given labor force b. the capital stock decreases for a given labor force c. output decreases d. employment increases e. investment decreases
What is microfinance, and how can it contribute to economic growth?
What will be an ideal response?
The real wage rate is defined as the wage rate divided by
A. the interest rate. B. the money supply. C. nominal GDP. D. the price level.