Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?
What will be an ideal response?
Economies of scale exist when a firm increases its scale of operations and lower per unit costs of production are experienced. Diseconomies of scale exist when a firm increases its scale of operations and higher per unit costs of production are experienced. If economies of scale are extensive we would expect to find a small number of very large firms operating within the industry. Conversely, if diseconomies of scale set in relatively early, we would expect to find a large number of relatively small firms operating within the industry.
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a. Latin America. b. Africa c. East Asia d. Western Europe e. none of the above
A nation's foreign exchange reserves consist mainly of
A) excess reserves held by its banks. B) government securities of that nation. C) the legal currency of that nation. D) currencies of other nations.
Which of the following methods could be used by an employer to align the incentives of an employee with its own interests?
a. Paying market wages b. Paying efficiency wages c. Signaling d. Partially outsourcing human resource functions
The graph shown demonstrates a tax on buyers. Which of the following can be said about the effect of this tax?
A. The tax creates a shortage, and the government must regulate the market. B. The tax creates a surplus, and the government must buy the excess. C. The tax creates a shortage, and rationing must occur. D. None of these is true.