When a firm increases its plant size in the long run and its per-unit costs fall, this is called
A. diminishing returns, and is shown by the downward-sloping portion of the MP curve (or the upward-sloping portion of the MC curve).
B. constant returns to scale, and is shown by the flat portion of the LRATC curve.
C. diseconomies of scale, and is shown by the upward-sloping portion of the LRATC curve.
D. economies of scale, and is shown by the downward-sloping portion of the LRATC curve
Answer
Option D
D. economies of scale, and is shown by the downward-sloping portion of the LRATC curve
The decrease in the LRATC is called economies of scale and it is depicted by the downward-sloping portion of the LRATC curve.
When a firm increases its plant size in the long run and its per-unit costs fall,...
When the firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is _and the firm is experiencing O A. horizontal, constant returns to scale OB. upward sloping; diseconomies of scale O C. downward sloping; constant returns to scale OD. downward sloping, economies of scale
13. As output (plant size) increases, economies of scale occur when the A) long-run average cost increases. B) long-run average cost decreases. C) short-run average total cost decreases. D) long-run average cost stays constant 14. Economies of scale can occur as a result of which of the following? A) increasing marginal costs as the firm increases its size B) higher fixed cost as the firm increases its size C) management difficulties as the firm increases its size D) greater specialization...
In the short run, there are many U-shaped cost curves. Which of the following explains why the ATC is that way in the short run? It is U-shaped because the minimum efficient scale is achieved. It is U-shaped because the AFC declines as more goods are produced. It is U-shaped because of economies and diseconomies of scale. It is not U-shaped. It is U-shaped because of increasing and decreasing returns. If a firm is experiencing economies of scale, what is...
If a firm's long-run average cost goes from $3 to $2.5 when output increases, the firm is experiencing ________. economies of scale constant returns to scale diseconomies of scale a shift in its long-run average cost curve
Which of the following statements is accurate? Select the correct answer below: A. when the long-run average cost (LRAC) decreases as output increases, a firm is experiencing diseconomies of scale. B. when the long-run average cost (LRAC) increases as output increases, a firm is experiencing diseconomies of scale. C. when the long-run average cost (LRAC) increases as output increases, a firm is experiencing economies of scale. D. when the long-run average cost (LRAC) decreases as output increases, a firm is...
3: When a firm experiences diseconomies of scale when expanding its operations, its long-run ATC curve: is U-shaped slopes downward. is flat. slopes upward.
QUESTION 30 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 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 A large aircraft manufacturer, like Boeing, may have a...
An increase in long-run average costs resulting from increases in output is __________. Question 18 options: attributed to constant returns to scale attributed to diseconomies of scale attributed to the law of diminishing marginal product attributed to economies of scale
.Question Completion Status QUESTION 11 Suppose a firm doubles its employment of all inptuts in the long run. If this action more than doubles the amount of capital produced, then this firm is experiencing O Increasing returns to scale diminishing marginal returns o technological progress O positive marginal revenue QUESTION 12 When input prices are fixed, decreasing returns to scale implies that the long run average cost curve is downward sloping O horizontal upward sloping O Ushaped QUESTION 13 If...
Assume a firm builds a larger plant and, at any particular output, its short-run average cost increases. Which of the following statements is correct? Diseconomies of scale must be present. Economies, diseconomies, and constant returns to scale are all possible. Constant returns to scale must be present Economies of scale must be present A firm's economic capacity and its most productive output level are the same. True False