A delivery company lowers its automobile insurance costs as it increases in size because as the size of the fleet of delivery trucks increases, the premium per driver decreases substantially. This is an example of
A. economies of scale.
B. constant returns to scale.
C. diseconomies of scale.
D. diminishing marginal returns.
Answer: A
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If an economy is at the short-run equilibrium illustrated by the figure above, a discretionary fiscal policy to adjust the economy to full employment is to
A) increase the quantity of money. B) decrease taxes. C) increase government spending. D) increase taxes and decrease government spending simultaneously. E) decrease the quantity of money.
Explain the causes of the U.S. Savings and Loans crisis of the early 1980s
What will be an ideal response?
Which of the following leads to a lower level of unemployment in the long run?
a. both an increase in the size of the money supply and an increase in the money supply growth rate b. an increase in the size of the money supply but not an increase in the money supply growth rate c. an increase in the money supply growth rate, but not an increase in the size of the money supply d. neither an increase in the size of the money supply nor an increase in the money supply growth rate
Figure 10-1
If the price level in Figure 10-1 were 120,
a.
there would be excess goods on the market.
b.
firms would have to raise their prices.
c.
inventories would be disappearing.
d.
aggregate quantity demanded would exceed aggregate quantity supplied.