Econ 528 Final || A+ GRADED
Economies of scale correct answers If, when a firm double all its inputs, its average cost of
production decreases, then production displays
A - diminishing returns
B - economies of scale
C - diseconomies of scale
D - declining fixed costs
The lowest average cost of producing every level of output in the long run correct answers
The long-run average cost curve shows
A - the lowest average cost of producing every level of output in the long run
B - where the most profitable level of output occurs
C - the average cost of producing where diminishing returns are not present
D - the plant size of scale that the firm should build
An increase in the output level will increase profit correct answers All of the following
statements are true of the minimum efficient scale except one. Which one?
A - all possible economies of scale have been exhausted
B - the short-run average total cost curve's minimum point is equal to the long run average
cost curve's minimum point
C - an increase in the scale of operation will encounter diseconomies of scale.
D - an increase in the output level will increase profit
The firm has achieved the lowest possible average cost of production correct answers At the
minimum efficient scale
A - all possible economies of scale have not been exhausted
B - the firm has achieved the lowest possible average cost of production
C - any increases in the scale of operation will encounter further economies of scale
D - marginal cost is at its minimum
It is upward-sloping correct answers The President of Toyota's Georgetown plant was quoted
as saying, "Demand for high volumes saps your energy. Over a period of time, it eroded our
focus [and] thinned out the expertise and knowledge we painstakingly built up over the
years." Based on this quote, what must be true of the plant's average cost of production
curve?
A - it is upward-sloping
B - it is downward-sloping
C - it is a ray from the origin
D - it is U-shaped
Produces more than one product correct answers Economies of scope refers to the decrease in
average total cost that can occur when a firm
A - produces more than one product
Economies of scale correct answers If, when a firm double all its inputs, its average cost of
production decreases, then production displays
A - diminishing returns
B - economies of scale
C - diseconomies of scale
D - declining fixed costs
The lowest average cost of producing every level of output in the long run correct answers
The long-run average cost curve shows
A - the lowest average cost of producing every level of output in the long run
B - where the most profitable level of output occurs
C - the average cost of producing where diminishing returns are not present
D - the plant size of scale that the firm should build
An increase in the output level will increase profit correct answers All of the following
statements are true of the minimum efficient scale except one. Which one?
A - all possible economies of scale have been exhausted
B - the short-run average total cost curve's minimum point is equal to the long run average
cost curve's minimum point
C - an increase in the scale of operation will encounter diseconomies of scale.
D - an increase in the output level will increase profit
The firm has achieved the lowest possible average cost of production correct answers At the
minimum efficient scale
A - all possible economies of scale have not been exhausted
B - the firm has achieved the lowest possible average cost of production
C - any increases in the scale of operation will encounter further economies of scale
D - marginal cost is at its minimum
It is upward-sloping correct answers The President of Toyota's Georgetown plant was quoted
as saying, "Demand for high volumes saps your energy. Over a period of time, it eroded our
focus [and] thinned out the expertise and knowledge we painstakingly built up over the
years." Based on this quote, what must be true of the plant's average cost of production
curve?
A - it is upward-sloping
B - it is downward-sloping
C - it is a ray from the origin
D - it is U-shaped
Produces more than one product correct answers Economies of scope refers to the decrease in
average total cost that can occur when a firm
A - produces more than one product
