27 In which of the following situations would consideration of the minimum effic
ID: 1153947 • Letter: 2
Question
27 In which of the following situations would consideration of the minimum efficient scale of operation suggest that the market should be served by a single firm to minimize production costs? When the LRAC curve slopes downward over the relevant range of output. When the LRAC curve hits its minimum point at a relatively low level of output and then increases and the demand for output is quite large. When the LRAC curve hits its minimum point at a relatively low level of output but then remains constant as the scale of operation is increased and the demand for output is quite large. When the LRAC curve initially increases and then decreases beyond some point.
28 Which of the following statements about production isoquants is correct? They show all the combinations of two inputs that result in the same level of output. They are usually concave to the origin. They show all the combinations of two inputs that yield the same cost of production. They represent lower levels of output the farther they are from the origin.
29 An isocost line represents: all the combinations of inputs to a production process that result in the same total costs of production. all the combinations of inputs that result in the same amount of output. all of the combinations of two inputs for which the amount of money spent on each of the inputs is equal. all of the levels of output that result in the same total cost. 30 Graphically, all else constant, a decrease in the price of labor would be illustrated by: a parallel shift of the isocost line in toward the origin. rotating the isocost line away from the origin along the labor axis. a parallel shift of the isocost line away from the origin. rotating the isocost line in toward the origin along the capital axis
30 Graphically, all else constant, a decrease in the price of labor would be illustrated by:
a parallel shift of the isocost line in toward the origin.
rotating the isocost line away from the origin along the labor axis.
a parallel shift of the isocost line away from the origin.
rotating the isocost line in toward the origin along the capital axis.
.
a parallel shift of the isocost line in toward the origin.
rotating the isocost line away from the origin along the labor axis.
a parallel shift of the isocost line away from the origin.
rotating the isocost line in toward the origin along the capital axis.
Explanation / Answer
Answer 27:
Option A. When the LRAC curve slopes downwards over a relevant range of output the it suggests that market should be served by a single firm to minimize the total cost of production.
Answer 28:
Option A. Isoquants show all the combinations of two inputs that result in the same level of output.
Answer 29:
Option A. Isocost represents all the combinations of inputs to a production process that result in the same total costs of production.
Answer 30:
Option B. A decrease in the price of labor will increase the amount of labor employed and thus decrease in the price of labor can be represented by rotating the isocost line away from the origin along the labor axis.
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