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19) Economies of scale are present when A) the LRAC curve slopes downward. B) total fixed cost increases. the LRAC curve is horizontal. D) average total cost remains constant as input increases. E) average total cost rises as output increases.

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Beverley Smith
Beverley SmithLv2
24 Mar 2018
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Related questions

Use the figure below to answer the following questions. Average cost (dellars per teapot LRAC Output (teapots per day) Figure 11.4.4 22) Refer to Figure 11.4.4, which illustrates the long-run average total cost curve. Which one of the following statements isfalse? A) Economies of scale exist between 0 and Qo units of output. B) Diseconomies of scale exist between 0 and Q1 units of output. ) Constant retums to scale exist between Qo and Q1 units of output D) Constant returns to scale exist between Q1 and Q2 units of output. E) Diseconomies of scale exist at quantities greater than Q2 units of output.

36) A firm encountering economies of scale over some range of output will have a:

a) rising long-run average cost curve.

b) falling long-run average cost curve.

c) constant long-run average cost curve.

d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

a) economies of scale.

b) normative economies.

c) diminishing marginal returns.

d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) increasing the average total costs.

40) Economies and diseconomies of scale explain why the:

a) short-run average fixed cost curve declines so long as output increases.

b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.

c) long-run average total cost curve is typically U-shaped.

d) short-run average variable cost curve is U-shaped.

37) Consider the following information for a regional cable television service provider that is a natural monopoly and has a U-shaped long-run average cost curve. (Assume the service provided is basic cable and units are household connections.) - minimum LRAC = $9.00 per month - minimum efficient scale = 2 million units - current output = 1.7 million units - current LRAC = $10.25 per month If this firm is currently being regulated and is following an average-cost pricing policy, the price of service is per month A) lower than $9.00 B) $9.00 C) between $9.00 and $10.25 D) $10.25 E) higher than $10.25

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