Define the terms "economies of scale," "constant returns to scale," and "diseconomies of scale." Among these three situations, operating in which stage is likely to be most profitable for a firm?
What will be an ideal response?
Economies of scale occur when the average total cost falls as the quantity produced increases.
Constant returns to scale exist when the average total cost does not change as the quantity produced changes.
Diseconomies of scale occur when the average total cost rises as the quantity produced increases.
Operating at a stage where economies of scale occur is likely to be most profitable from a firm's point of view. This is because it allows a firm to expand its production with a decrease in the cost incurred per unit of additional output produced.
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Refer to the figure above. If the capital stock is fixed at $300, what is the consumption in the economy?
A) $3,000 B) $4,000 C) $2,000 D) $5,000
If producers believe that the increase in their relative prices is large relative to the increase in the general price level, then the slope of the short-run aggregate supply curve will be
A) infinite. B) small. C) large. D) negative.
Public school teachers are known to have low wages. Which of the following would push the teachers' wages lower?
a. Public school teacher jobs are difficult. b. Public school teachers are required to be college graduates. c. Public school teachers belong to a union. d. Teaching in a public school has a high element of personal satisfaction.
Unless money can perform its job as a _______, it doesn't matter that much if it performs its other jobs that well.
Fill in the blank(s) with the appropriate word(s).