For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer
What will be an ideal response?
When average costs continue to decline as output rises, the industry experiences economies of scale over all output levels. Thus, the long-run average cost curve only falls with increasing output. This means that the minimum efficient scale does not exist.
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The CPI overestimates inflation because
a. it often ignores the invention of new goods. b. it always includes discount stores. c. it allows substitution from more expensive goods to cheaper goods. d. all of the above.
Competition in an industry increases if two firms in the industry combine into one in a merger
a. True b. False Indicate whether the statement is true or false
Price controls are a common feature in the pharmaceutical industry in most developed countries. Which one of the following statements about price controls is true?
a. Canada's use of price ceilings has become the standard practice across Europe. b. Generic competition is more common in countries with strict price controls. c. Countries with the most stringent price controls do the least research. d. Most developed countries use similar methods to control prices in pharmaceutical markets. e. The U.S. is the only major country that relies strictly on market pricing and refuses to use price controls of any kind.
(Last Word) Which of the following best illustrates the post hoc, ergo propter hoc fallacy?
A. Because it was 90 degrees today, I worked up a sweat playing tennis. B. I took the day off work to go to the beach and that's why it rained. C. Because it rained at the football game, my new sweater got wet. D. Because I have studied diligently this semester, my grade average has improved.