Question

QUESTION 30

1. A downward-sloping portion of a long-run average total cost curve is the result of:

   		economies of scale.
   		diseconomies of scale.
   		diminishing returns.
   		the existence of fixed resources.

2.5 points   

QUESTION 31

1. In the long run, firms in many industries often experience a falling average total cost curve as a result of:

   		gains through trade.
   		increasing marginal returns.
   		economies of scale.
   		lower fixed costs.

2.5 points   

QUESTION 32

1. A large aircraft manufacturer, like Boeing, may have a cost advantage over a new smaller manufacturer because of:

   		diseconomies of scale.
   		economies of scale.
   		diminishing returns to a fixed factor of production.
   		the principal agent problem is generally less severe for larger firms.

2.5 points   

QUESTION 33

1. Diseconomies of scale exist over the range of output for which the long-run average cost curve is:

   		constant.
   		falling.
   		rising.
   		none of these.

2.5 points   

QUESTION 34

1. Market structure is defined as the:

   		number of firms in each industry.
   		similarity of the product sold.
   		ease of entry into and exit from the market.
   		all of these.

2.5 points   

QUESTION 35

1. Perfect competition is defined as market structure in which:

   		there are many small sellers.
   		the product is homogeneous.
   		it is very easy for firms to enter or exit the market.
   		all of these.

2.5 points   

QUESTION 36

1. If a firm has no ability to select the price of its product, it:

   		will go out of business due to losses.
   		is a price-maker.
   		cannot maximize profit.
   		has a horizontal individual demand curve.

Answer 1

30. Ans: economies of scale

Explanation:

Economies of scale refers to a continues fall in long run ATC in the long run when scale of production increases.

31. Ans: economies of scale

Explanation:

Economies of scale refers to a continues fall in long run ATC in the long run when scale of production increases.

32. Ans: economies of scale.

Explanation:

Economies of scale refers to a continues fall in long run ATC in the long run when scale of production increases.

33. Ans: rising

Explanation:

Economies of scale leads to falling ATC and Diseconomies of scale leads to rising ATC curve in the long run.

34. Ans: all of these.

35. Ans: all of these.

36. Ans: has a horizontal individual demand curve.

Explanation:

It is a case of perfect competition where firms are price takers. Price is determined by the industry with the intersection of market demand and market supply. All the firms accepts this industry determined price. So, the demand curve of the firm is a horizontal line.