You would expect that your firm is experiencing increasing returns to scale if
a. Long run average costs increase with output
b. Long run average costs decrease with output
c. Long run average costs are constant with respect to output
d. None of the above
b
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A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?
What will be an ideal response?
Which of the following could be evidence of a market failure?
A) There are only a handful of firms competing against each other in an industry. B) The market price of a product is above the average cost of production. C) Resources in an economy are not fully utilized. D) Market prices do not reflect true production costs.
Would you expect a tax on cigarettes to be more effective at discouraging consumption over the long run or the short run?
A. Long run because demand becomes more elastic over time B. Long run because demand becomes less elastic over time C. Short run because demand becomes more elastic over time D. Short run because demand becomes less elastic over time
The cause of the "greenhouse effect" is the
a. increasing use of glass in construction. b. growth of desertification. c. burning of "fossil fuels." d. decline in carbon dioxide in the atmosphere.