Question

When a firm’s longrun average total costs do not vary as output increases, the firm exhibits__

a. economies of scale.

b. constant returns to scale.

c. diseconomies of scale.

In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits___

a. economies of scale.

b. constant returns to scale

c. diseconomies of scale.

d. increasing returns to scale.

Answer #1

Answer : 1) The answer is option b.

For firm's constant returns to scale the firm's long-run average total cost does not vary when output increase. Hence except option b other options are not correct. Therefore, option b is the correct answer.

2) The answer is option c.

When output is 1250 then average total cost = Total cost / Output level = 2500 / 1250 = $2.

When output is 1500 then average total cost = 4000 / 1500 = $2.67 .

If firm's average total coat increase when output increase then the firm face a situation of decreasing returns to scale. This decreasing returns to scale is also known as diseconomies of scale. Hence except option c other options are not correct. Therefore, option c is the correct answer.

This results when the average total cost per unit of output
increases as more output is produced
Group of answer choices
Diseconomies of scale
Economies of scale
Equal marginal principle
Increasing output substitution ratio

In the long-run a firm has increased output so that their
average total cost changed from $200 to an average total cost of
$250.
This implies the firm is experiencing:
Economies of scale
Constant returns to scale
Diseconomies of scale
Diminishing returns to scale

Average variable cost
A.
decreases when its value is greater than marginal cost, and
increases when its value is less than marginal cost.
B.
decreases when its value is less than marginal cost, and
increases when its value is greater than marginal cost.
C.
is perpetually increasing, sometimes initially at increasing
rates but eventually at decreasing ones.
D.
perpetually decreases.
Average fixed costs
A.
are perpetually decreasing as output increases, but at a
decreasing rate.
B.
are perpetually decreasing as...

What term is used to describe when the average cost of producing
each individual unit declines as total output increases?
1)
Variable costs
2)
Constant returns to scale
3)
Economies of scale
4)
Increasing returns to scale

1. Long run average costs rise as output (q) increases
Select one:
a. Economy of Scale
b. Decreasing Returns to Scale
c. Increasing Returns to Scale
d. Constant Returns to Scale
e. Diseconomy of Scale
2.
A production function where the MRTS is constant at all points.
Isoquants are straight lines.
Select one:
a. Production Function
b. Isoquant
c. Perfect Substitutes Production Function
d. Isocost Line
e. Technology Function
f. Fixed-Proportions Production Function
3.
A production function with L-shaped isoquants...

Question 12
The long-run average
cost curve will be upward-sloping when the firm has:
constant returns to
scale.
marginal returns to
scale.
economies of scale
diseconomies of
scale
Question 13
A production function
that is characterized by increasing returns to scale cannot be
affected by diminishing marginal product.
True
False
Question 14
A firm always operates at some point on its long-run average
total cost curve in both the long run and the short run.
True
False
Question 15
In...

9. Average cost in the long-run is defined as _____.
TVC/Q
TC/Q
TVC + TFC/Q
none of the above
10. Economies of scale is a characteristic of production where
______.
average costs increase as output increases
total cost decreases as output increases
average cost decreases as output increases
average cost decreases as output decreases
11. Which of the following factors of production is more likely
to be fixed in the short run?
The number of workers.
Changes in electricity consumed....

Burgin's Broilers produced one more chicken, and as a result its
long-run average total cost increased. What must be true?
a.
Burgin's Broilers is experiencing economies of scale when it
increases output.
b.
Burgin's Broilers is losing money.
c.
Burgin's Broilers is experiencing diseconomies of scale when it
increases output.
d.
Burgin's Broilers is experiencing increasing fixed costs.
People who buy good Z are typically in a hurry when they buy it.
Good Z has _____ demand, and if the...

A firm produces output according to the production function.
Q=sqrt(L*K) The
associated marginal products are MPL = .5*sqrt(K/L) and MPK =
.5*sqrt(L/K)
(a) Does this production function have increasing, decreasing, or
constant marginal
returns to labor?
(b) Does this production function have increasing, decreasing or
constant returns to
scale?
(c) Find the firm's short-run total cost function when K=16. The
price of labor is w and
the price of capital is r.
(d) Find the firm's long-run total cost function...

1)
As a firm’s production increases:
Group of answer choices
a Average variable costs increase initially and eventually
decrease
b Average fixed costs will increase
c Average total costs decrease initially and eventually
increase
d Total fixed costs will decrease
e Its total variable costs increase initially and eventually
decrease
2)
Mr. Hudson notes that if he produces 10 pairs of shoes per day,
his average fixed cost (AFC) is $14, and his marginal cost is $8;
if he produces...

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