Refer to the long-run cost diagram for a firm. If the firm produces output Q 2 at an average cost of ATC 3 , then the firm is:
A. producing the profit-maximizing output but is failing to minimize production costs.
B. incurring X-inefficiency but is realizing all existing economies of scale.
C. incurring X-inefficiency and is failing to realize all existing economies of scale.
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.
D. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale.
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When the price of a normal good falls, the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
If a negative externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to increase B. supply needs to decrease C. demand needs to increase D. b and c E. none of the above
Buying a product in one market and reselling it in another market at a higher price is referred to as
A) arbitrage. B) purchasing power parity. C) crowding in. D) barter.
The worst and most difficult to extract resources are used first.
Answer the following statement true (T) or false (F)