The long-run average total cost curve is U-shaped because:
a. a firm initially experiences economies of scale and then diseconomies of scale.
b. the law of diminishing returns to a factor sets in beyond a certain level of output.
c. a firm initially experiences diseconomies of scale and then economies of scale.
d. division of labor keeps labor productivity constant irrespective of expansion or contraction in production.
e. the efficiency of capital increases over a period of time.
a
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One way to make consumers take a negative externality into account in their demand decision is to:
A. place a tax on the item. B. subsidize the purchase of the item. C. give suppliers a production credit. D. None of these statements is true.
In the United States during the 1960s, government spending dramatically increased to fight the Vietnam War, which resulted in:
a. demand-pull inflation. b. cost-push inflation. c. a disinflationary recession. d. stagflation.
When demand is inelastic,
A) price and revenue move in opposite directions. B) price and revenue are not related. C) price and quantity demanded move in opposite directions. D) price and revenue move in the same direction.
Is the firm a perfect competitor or an imperfect competitor? Explain.
