A firm has a total cost function of C(Q) = 75 + 25Q1/2. The firm experiences:
A. diseconomies of scale.
B. economies of scale.
C. constant returns to scale.
D. All of the statements associated with this question are correct.
Answer: B
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In the long run, if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve then
A) the firm would earn an economic profit. B) the firm would earn enough revenue to cover its variable costs, but not its fixed costs. C) the firm would break even. D) the firm would shut down temporarily.
Suppose we are given that the value of a particular utility function is a constant. That is, U(X,Y) = c. Then, the total derivative of this relation is:
A. (?U/?X)dX + (?U/?Y)dY = c. B. (?U/?X)dX + (?U/?Y)dY = 0. C. (?Y/?X)dU + (?X/?Y)dU = c. D. (?Y/?X)dX + (?X/?Y)dY = 0.
Which of the following statements is FALSE?
A) Economists empirically test their models. B) Economic models are not used to make predictions. C) An economic model should capture only the key relationships that are sufficient to analyze the particular problem being studied. D) Economic models relate to behavior rather than to individual thought processes.
The following factors tend to make the real GDP growth rate understate the growth of economic well-being, except:
A. Improved product quality B. Added leisure C. Debasement of the environment D. More stress-free lifestyle