When a firm expands in size such that its workers can specialize in any one activity, the long-run average total cost of the firm gradually increases
a. True
b. False
Indicate whether the statement is true or false
False
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Explain the permanent-income hypothesis and the life-cycle hypothesis. How are these hypotheses similar?
What will be an ideal response?
Regulation that is based on allowing prices to reflect only the actual operating cost of production is known as
A. cost-of-service regulation. B. rate-of-return regulation. C. average cost regulation. D. marginal cost regulation.
Economists assume that
A) individuals behave in unpredictable ways. B) consumer behavior is explained by the existence of unlimited resources. C) people put other people's interests ahead of their own. D) optimal decisions are made at the margin.
Which of the following must be true about homothetic tastes:
A. Utility functions that represent those tastes are homogeneous of degree 1. B. There exists a utility function that represents those tastes and is homogeneous of degree 1. C. There exists a utility function that represents those tastes such that the expenditure function is homogeneous of degree 1. D. The indirect utility function is homogeneous of degree zero. E. Both (a) and (c). F. Both (b) and (c). G. Both (b) and (d) H. None of the above.