Suppose a firm is in a range of production where it is experiencing economies of scale. Knowing this, we can predict that:
A. the long-run average total cost curve is upsloping.
B. a 10 percent increase in all inputs will increase output by less than 10 percent.
C. a 10 percent increase in all inputs will increase output by more than 10 percent.
D. the firm is encountering problems of managerial bureaucracy because of its size.
Answer: C
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Lu Thier is an accomplished violin and viola maker. He can make either 6 violins or 6 violas each year, or a combination such as 3 violins and 3 violas. Which statement below is true?
A) The opportunity cost of producing 1 violin is 1 viola. B) The opportunity cost of producing 1 violin is 3 violas. C) The opportunity cost of producing 1 violin is 6 violas. D) The opportunity cost of producing 1 violin is 9 violas.
A firm is likely to pay higher efficiency wages when:
A) it is easy to monitor workers. B) it is not easy to monitor workers. C) workers do not have a tendency to shirk at work. D) the minimum wages are set above the equilibrium wage rate.
What is a perfectly contestable market?
What will be an ideal response?
Keynesians prefer a disinflation policy of
A. stabilization. B. cold turkey. C. aggregate demand management. D. gradualism.