A firm produces 300 products with 50 workers and 20 machines. When it doubles its inputs to 100 workers and 40 machines, production more than doubles to 700 products. This is an example of:
Answer: increasing returns to scale (associated with economies of scale).
You might also like to view...
In both perfect competition and monopoly, a firm: a. maximizes profit by equating marginal revenue to marginal cost
b. will shut down in the short run if price is less than average variable cost. c. will always earn a zero economic profit. d. will be characterized by both (a) and (b).
A firm may choose to raise price when
A. profits would increase at the higher price. B. MR > MC. C. average profit is zero. D. it relies on marginal analysis.
Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculators Per HourComputers Per HourSmith10010Jones1206 Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour. If they wish to produce 14 computers and 40 calculators per hour efficiently, then Smith should spend ________, and Jones should spend ________.
A. 30 minutes making each; 30 minutes making each B. 1 hour making computers; 40 minutes making computers and 20 minutes making calculators C. 1 hour making computers; 20 minutes making computers and 40 minutes making calculators D. 45 minutes making computers and 15 making calculators; 1 hour making calculators
Under private enterprise, production is guided by _____________________________.
Fill in the blank(s) with the appropriate word(s).