Why are some long-run average cost curves steeper on the downward side than others?
What will be an ideal response?
The slope of the downward-sloping portion of the long-run average cost is a measure of the degree to which the firm experiences economies of scale. If the firm expends a large amount of its costs on indivisible inputs, the firm will spread this indivisible input's cost out over more and more units as output increases, implying significant economies of scale. Firms that require many individual tasks that can be learned easily will also have substantial increasing returns due to specialization.
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The Romer model is distinct from the Solow model in that the former assumes that ________
A) technology is fixed B) an increase in price affects quantity demanded, rather than demand C) some labor is devoted to producing new technology D) output per worker is fixed
The demand curve for spinach shows the quantity demanded of spinach
a. only at the equilibrium price of spinach b. at each possible price of spinach c. as income increases d. as income decreases e. at each possible price of a substitute good
If at current exchange rates it was cheaper to buy a product in country B than country A, we would expect people to sell country A's currency and buy country B's currency, according to the purchasing power parity theory
a. True b. False Indicate whether the statement is true or false
If a decision maker uses marginal analysis, then the relevant costs are the
a. full costs of a particular activity or product. b. fixed costs which do not vary with the extra activity or output. c. profits obtained on the activity or product. d. average costs for a particular activity or product. e. additional costs of a particular activity or product.