Explain the cost advantage of a firm operating at constant returns to scale
If we compare a firm operating in the constant returns to scale range to a firm that is operating in the economies of scale range, there are significant differences. The firm in the economies of scale range has not yet reached the lowest possible cost per unit because it is producing too small of a quantity. In contrast, the firm in the constant cost range is producing beyond its minimum efficient scale, with the lowest possible cost per unit and therefore enjoys an advantage over smaller firms with higher costs.
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To determine if a market is an oligopoly, we need to determine if
A. the market's HHI is less than 900. B. the firms are so few that they recognize their mutual interdependencies. C. cartels are legal in their market. D. the firms make identical or differentiated products. E. there are many firms in the market.
In the circular flow model, which of the following is an injection?
a. investment spending b. government taxes c. total exports d. imports
If the demand for pizza increases, then as a result, it is highly likely that the demand for:
A. soda will increase. B. mozzarella cheese will increase. C. chicken nuggets will fall. D. All of these are a likely result.
Someone wants to open a new restaurant in town. Identify which of the following would be a barrier to entry.
a) None of the available property in town is zoned for business use. b) The price of tablecloths has risen. c) Consumers buy only from businesses they know. d) The town requires all businesses to pay a hefty annual permit fee. e) The town requires new businesses to pay a hefty permit fee.