Draw a graph showing the long-run average cost curve for a firm that experiences economies of scale.
What will be an ideal response?
As shown in the graph, the long-run average cost curve for a firm that experiences economies of scale is "L" shaped.
You might also like to view...
In a market with a price support set above the equilibrium price,
A) consumers gain. B) taxes on consumers decrease. C) marginal benefit exceeds marginal cost. D) the market is efficient. E) farmers gain.
Which of the following provides support for the use of discretion in economic policy-making?
A) any policy rule that is based on a particular model will prove wrong if that model is wrong B) the existence of a political business cycle C) the conclusions of Friedman and Schwartz with respect to monetary and fiscal policy D) the Watergate scandal
The saving rate has the following characteristic in Solow's exogenous growth model
A) it increases with output. B) it first decreases, then increases with output. C) it first increases, then decreases with output. D) it is constant.
Owners of a firm want the managers to make business decisions which will
A. maximize the value of the firm. B. maximize expected profit in each period of operation. C. maximize the market share of the firm. D. both a and b are correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods.