For economies of scale, a(n) ________ in a firm's scale of production leads to ________ average total cost.
A. decrease; no change in
B. decrease; lower
C. increase; lower
D. increase; higher
Answer: C
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If the price elasticity of demand is greater than 1, a monopoly's
A) total revenue increases when the firm lowers its price. B) total revenue decreases when the firm lowers its price. C) marginal revenue is negative. D) marginal revenue is zero.
Throughout this discussion of taxes, there has been repeated mention of the need for progressivity in the tax system. Why is this an important goal for tax systems in most societies?
What will be an ideal response?
Suppose that Figure 7.4 shows a monopolist's demand curve, marginal revenue, and its costs. The monopolist would maximize its profit by producing a quantity of:
A. 30 units. B. 50 units. C. 60 units. D. There is not sufficient information.
If firms were forced to take into account the full social costs of production, then
A) output would decrease but pollution levels would probably remain at the same levels. B) output would be unaffected but pollution levels would come down. C) output and pollution levels would decrease. D) output could be increased and pollution levels would decrease.