What are economies of scale? What is the main source of economies of scale?
What will be an ideal response?
Economies of scale are when a firm increases its plant size and labor employed by the same percentage and its output increases by a larger percentage so that its average total cost decreases. Economies of scale result because of specialization. When a firm increases its capital stock, the capital can be more specialized and hence produce more output than less specialized, more generalized capital. Similarly, when a firm increases its labor force, it can hire more specialists, each of whom is better at doing his or her assigned task than a less specialized individual. As a result of specialization, the firm's average product increases so that its average total cost decreases.
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An official measure of money in the United States is M1, which includes the sum of
A) checkable deposits plus small time deposits. B) currency plus checkable deposits. C) currency plus credit card transactions. D) currency plus traveler's checks plus time deposits. E) currency plus traveler's checks plus checkable deposits plus small time deposits plus money market funds and other deposits.
Assuming that there are NO income taxes, if both autonomous taxes, and government expenditures were to rise by $100 million, we would expect equilibrium GDP to
A) rise by $100 million. B) rise, but by a multiple of $100 million. C) rise by less than $100 million. D) remain unaffected because leakages have changed by the same amount.
Gerald earns a higher salary than his brother Peter because Gerald went to law school and is a lawyer, whereas Peter dropped out of college to work as a mechanic. The difference in salary illustrates a compensating differential
a. True b. False Indicate whether the statement is true or false
There is only one firm in the market. The economist analyzing that market has said she would expect the price to equal the firm's average total costs.
A. She must be analyzing this market using a game theory model. B. She must be analyzing this market using a contestable market model. C. She must be analyzing this market using a cartel model. D. She must not be an economist, because that answer is clearly wrong.