Question

QUESTION 1

Average fixed costs:

1. are always falling with increases in production.

2. are dependent on marginal costs.

3. are always rising with increases in production

4. are dependent on average variable costs.

QUESTION 2

If a firm is experiencing diseconomies of scale, then the long-run average cost curve is

1. shifting.

2. rising.

3. horizontal.

4. falling.

QUESTION 3

A U-shaped long-run average cost curve indicates that

1. diseconomies of scale follow economies of scale

2. economies of scale and economies of scope are the same.

3. economies of scale dominate diseconomies of scale over all levels of production.

4. economies of scale follow diseconomies of scale.

QUESTION 4

Economies of scale can result from

1. larger machines.

2. large purchases.

3. all of these choices.

4. specialization.

QUESTION 5

The period of time over which all inputs are variable is the

1. long run.

2. short run.

3. calendar year.

4. market horizon.

QUESTION 6

The period of time over which there is at least one fixed input is the

1. short run.

2. long run.

3. calendar year.

4. market horizon.

Answer 1

QUESTION 1

Average fixed costs:

1. are always falling with increases in production.

Average fixed cost falls as level of output is increased. Total Fixed cost does not change with change in output but average fixed cost keeps on falling as output is increased.

QUESTION 2

If a firm is experiencing diseconomies of scale, then the long-run average cost curve is

4. falling.

QUESTION 3

A U-shaped long-run average cost curve indicates that

1. diseconomies of scale follow economies of scale

.QUESTION 4

Economies of scale can result from

3. all of these choices.

QUESTION 5

The period of time over which all inputs are variable is the

1. long run.

QUESTION 6

The period of time over which there is at least one fixed input is the

1. short run.