#6 If a firm experiences economies of scale, a. it moves up along the long run a
ID: 1202122 • Letter: #
Question
#6 If a firm experiences economies of scale,
a. it moves up along the long run average total cost curve.
b. expansion of output becomes more expensive for the firm.
c. the firm can reduce its per unit cost by producing less.
d. the firm must shut down in the long run.
e. the firm can reduce its per unit cost by expanding production.
#7. The long-run average-total- cost curve represents:
a. the maximum cost of producing any level of output when all the factors are fixed.
b. the lowest cost of producing any level of output when all the factors are variable.
c. the maximum cost of producing any level of output when all the factors are variable.
d. the lowest cost of producing any level of output when all the factors are fixed.
e. the lowest cost of producing any level of output when at least one factor fixed.
#8 If average variable cost if falling, then:
a. average fixed cost is rising.
b. marginal cost must be falling.
c. marginal cost must be rising.
d. marginal cost lies below average variable cost.
e. marginal cost lies above average variable cost.
#11 When the marginal-cost curve lies above the average-total-cost curve, the average-total-cost curve slopes up and the average-variable-cost curve slopes down.
a. true
b. false.
#12. Demand is price-elastic at the top portion of a straight-line downward-sloping demand curve.
a. true
b. false.
Explanation / Answer
ans 6
e. the firm can reduce its per unit cost by expanding production.
economies of scale means percentage cahneg in output will be higher than percentage change in input so per unit cost will decrease
ans 7
b. the lowest cost of producing any level of output when all the factors are variable.
long run cost curve is effecient and gives minimum cost of producing
ans 8
d. marginal cost lies below average variable cost
ans 11
b. false.
no average varaible cost curve will be upward sloping because it starts increasing average total cost, so if ATC is upward sloping, AVC will also upward sloping
ans 12
a. true
top portion will have higher prices, and elasticity is more ta higher prices
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