Suppose that the average total cost of producing 5,000 Corvettes is $30,000 and the average total cost of producing 10,000 Corvettes is also $30,000 . Assuming this cost structure continues to hold, what can you say about the change in General Motors' total cost of Corvette production when they make the 10,001st car?
a. The total cost of production does not change at all.
b. The total cost of production will increase by the average variable cost of the next car.
c. The change is negative because there are diseconomies of scale.
d. There is not enough information to answer this question.
e. The total cost of production will increase by $30,000.
E
You might also like to view...
If a person withdraws $500 from his/her savings account and puts it in his/her checking account, then M1 will ________ and M2 will ________
A) not change; not change B) not change; increase C) increase; not change D) not change; decrease E) increase; decrease
The textbook discusses the carpet industry situated in the southeastern U.S., and the authors indicate that smaller carpet mills have ________ returns to scale while larger mills have ________ returns to scale
A) increasing, decreasing B) increasing, constant C) constant, decreasing D) constant, increasing
If a country has a net capital inflow, it is almost certainly experiences both capital inflows and capital outflows
a. True b. False Indicate whether the statement is true or false
One reason that firms will experience increasing returns to scale is:
A. the law of diminishing marginal returns. B. the specialization of inputs as scale increases. C. there is some fixed input that isn't being taken into consideration. D. large firms may be difficult to manage effectively.