If a production technology has increasing returns to scale throughout, then the marginal cost curve lies below the average cost curve throughout.
Answer the following statement true (T) or false (F)
True
Rationale: Increasing returns to scale means that average costs fall as output increases -- and the only way for AC to fall is for MC to lie below AC.
You might also like to view...
Are there any cases where a monopoly is beneficial to the economy?
What will be an ideal response?
A worker who brings both labor and human capital to her job earns
a. both the wage rate for her labor and a share in the employer's profits. b. both the wage rate for her labor and a market rate of return on her skills. c. the going wage rate for her labor, the benefits of her capital accrue to her employer's owners. d. both the going wage rate for her labor and annual bonuses based on the level of profits and her skills.
Which of the following statements is NOT true?
A. The United States government ensures that competition flourishes, that information flows freely, and that property rights are protected. B. The price mechanism will work best if there are a enough firms in each industry to ensure that no one firm can influence price. C. Environmental pollution is considered a market failure. D. Everything produced by the public sector is a public good.
According to Keynesian economists, monetary policy is __________ effective at changing the price level and Real GDP
A) always B) sometimes C) never D) There is no Keynesian position with respect to monetary policy.