Question

Part 1:

When a firm operates with economies of scale, average production costs:

1) rise when the firm gets larger.

2) fall as the firm gets larger.

3) fall as the firm gets smaller.

4) are unaffected by firm size.

Part 2:

“U-shaped” long-run average cost curves show that as firms get larger, they usually experience:

1) economies of scale.

2) constant returns to scale.

3) diseconomies of scale.

4) a, b, and c, in that order.

Part 3:

This firm’s lowest possible short-run and long-run average total cost [ATC] seems to occur at the bottom of curve:

C D 100 200 300 400 500 Output

1) A

2) B

3) C

4) D

Part 4:

If curve A, curve B, curve C, and curve D are the only choices of firm size, the long-run average cost curve is:

1) curve A.

2) curve B.

3) curve C.

4) curve D.

5) an envelope curve connecting the minimum possible average cost for producing each possible level of output.

Part 5:

The most efficient size color printer firm would operate along the envelope curve D and be:

1) on short-run curve A.

2) on short-run curve B.

3) on short-run curve C.

4) under-utilizing capacity.

Answer 1

"Part 1 when a form operates with economics of scale, average production cost falls as the form larger or as the output production increase) so, the connect answer is an option (2) part 2: ""U shaped"" long run average cost curves show that as forms get larger, they usually experience first economics of scale (ie full in average cost as output increase) after that constant return to scale (ie constant average cost as output increase) and at lost diseconomies of scale (I, e increase in average cost as output increase) so, the correct answer is an option (4) part 3: This forms lowest possible short run and long run average total cost (AIC) seam to occur at the bottom of curve of C. So, the correct answer is an option (3) \r\n part 4 th long run average cost curve is an envelop curve connecting the minimum possible average cost for producing each possible level of output so, the correct answer"