What is not true if a firm exhibits decreasing average cost as quantity increases?
A. Marginal cost must be below average cost.
B. Firms would go bankrupt if all prices were equal to marginal cost.
C. More customers can be served at lower average costs per unit.
D. This is called diseconomies of scale.
Answer: D
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Consider the two graphs above. Suppose that final goods are assembled only when ordered and to satisfy the precise preferences of each consumer. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
The learning curve is graphically represented as a plot of:
A) labor per unit on the horizontal axis and total cost on the vertical axis. B) labor per unit on the horizontal axis and total number of units produced on the vertical axis. C) total cost on the vertical axis and total number of units produced on the horizontal axis. D) labor per unit on the vertical axis and cumulative number of units produced on the horizontal axis.
When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ situation
a. oligopoly b. monopoly c. pure competition d. substitution e. monopolistic competition
Suppose that labor is measured on the horizontal axis and capital is measured on the vertical axis. At an interior solution:
A. MRTSLK = PL/PK. B. MRTSLK = - PL/PK. C. MRSTLK = PK/PL. D. MRTALK = - PK/PL.