When the Long-Run Average Cost Curve Is Downward Sloping,
When the long-run average cost curve is downward sloping,
A) economies of scale are present.
B) diseconomies of scale are present.
C) the average fixed cost curve must be upward sloping.
D) the firm experiences constant returns to scale.
E) The premise of the question is wrong because long-run average cost curves never slope downward.
Diseconomies of scale can occur as a result of which of the following?
A) Increasing marginal returns as the firm increases its size.
B) Lower total fixed cost as the firm increases its size.
C) Greater specialisation of labour and capital as the firm increases its size.
D) Management difficulties as the firm increases its size.
E) Increases in the labour force not matched by increases in the plant.
A firm's long-run average cost curve shows the ________ average cost at which it is possible to produce each output when the firm has had ________ time to change both its labour force and its plant.
A) lowest; sufficient
B) lowest; insufficient
C) highest; sufficient
D) average; sufficient
E) highest; insufficient
Consider a Coles hypermaket and a 7-Eleven store. In the long run,
A) the 7-Eleven store will definitely have lower average costs because their small stores are cheaper to build.
B) Coles or 7-Eleven may have economies of scale depending on how many customers are served.
C) Coles average total cost will decline faster than the 7-Eleven store and experience diseconomies of scale.
D) Coles will definitely have lower average costs because hypermarkets serve many more customers.
E) the 7-Eleven store's average total cost will be lower than Coles and always experience economies of scale.