1) Under which of the following circumstances, a firm is most likely to increase
ID: 1222718 • Letter: 1
Question
1) Under which of the following circumstances, a firm is most likely to increase its production?
The demand curve for the firm’s products has shifted to the left.
The firm is experiencing decreasing returns to factors.
The firm is experiencing economies of scope.
The price of the firm’s product is less than the average total cost in the long run.
2) The network of operations that account for the creation of a product is called:
the production process.
the value chain.
the logistic operation.
the intermediate network.
3) A steel manufacturer purchases an iron ore mine and a coal mine. This is an example of:
conglomerate merger.
horizontal integration.
vertical integration.
double marginalization.
4) A large firm can enjoy cost efficiency when:
it operates with a rising average total cost.
it charges a price equal to its marginal cost.
it experiences constant returns to factors.
it operates with a declining average variable cost.
5) Vertical integration by a firm is less likely to take place if:
the core competencies are different.
the firm has a weak or inefficient supply chain.
the firm is already experiencing economies of scale.
the production activities are strategically similar.
6)An oil company purchases a fleet of fuel carriers for distribution purpose. This is an example of:
horizontal integration.
conglomerate merger.
downstream integration.
upstream integration.
The demand curve for the firm’s products has shifted to the left.
The firm is experiencing decreasing returns to factors.
The firm is experiencing economies of scope.
The price of the firm’s product is less than the average total cost in the long run.
Explanation / Answer
1 The firm is experiencing economies of scope
2 the production process.
3 vertical integration.
4 it operates with a declining average variable cost.
5 the firm is already experiencing economies of scale.
6. downstream integration
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