Question

When Henry Ford introduced the assembly line to his automobile manufacturing plant, he significantly improved his company’s ­­­­__________.

1. short-run average cost
2. economy of scale
3. small-scale production
4. profit minimization

A firm should leave production unchanged when __________.

1. marginal cost > marginal revenue
2. marginal cost < marginal revenue
3. marginal cost = marginal revenue
4. marginal cost ≥ marginal revenue

Which of the following statements about the British firm John Lewis Partnership is FALSE?

1. Its employees elect their own governing body.
2. It is a large monopoly.
3. Its workers’ ownership rights differ from stockholder rights.
4. Employee ownership ends when a worker leaves the partnership.
   
   
   

Answer 1

When Henry Ford introduced the assembly line to his automobile manufacturing plant, he significantly improved his company’s economy of scale. This is because with the use of assembly line there was less wastage and the specialization of the work will improve. This will lead to improving the mass production and finally economies of scale. (Option b)

A firm should leave production unchanged when marginal cost = marginal revenue (Option c)

A firm should aim at earning more revenue than the cost that it incurs. If the marginal cost is greater than the marginal revenue then it implies that the firm is earning profits. When the marginal cost and marginal revenue are equal to each other then the firm should leave the production unchanged. It should make efforts to increase revenue more than cost.

The British firm, John Lewis Partnership is a monopoly. This statement is false. (Option b)