ng-run average-total-cost curve is U-shaped because economies of scale and then
ID: 1151756 • Letter: N
Question
ng-run average-total-cost curve is U-shaped because economies of scale and then diseconomies of scale. a. a firm initially experiences b the law of diminishing returns to a factor sets in beyond a certain level of output. c. a firm initially experienc d. division of labor keeps labor productivity constant irrespective of expansion or es diseconomies of scale and then economies of scale. contraction in production. efficiency of capital increases over a period of time. The table given below reports the price and quantity demanded of a commodity Table 5.1 Price Quantity Demanded S5 $6 300 200 a 0.25 b. 1.0 c. 1.3 d. 1.8 1.67 Because incomes are limited, purchasing one thing means not being able to purchase other thi indicates that: a. marginal utility diminishes. b. marginal utility is constant. c. people will allocate their income among goods so as to achieve the most satisfaction. d. people will allocate their income among goods so that the marginal utilities of all goods is equal. c people will allocate their income among goods so that the marginal utilities of all goods is zero. A firm gets less efficient as it gets bigger, if it is experiencing: a. b. 18. economies of scale. constant returns to scale. increasing returns to factors. d) diseconomies of scale e. a period of post war recovery.Explanation / Answer
15.
Answer: a
Economies of scale is a situation where the average cost is decreasing with the increase in output, which comes in the initial stage. A business can operate till the average cost (AC) becomes the lowest. AC would start increasing after it reaches the minimum point. This is called diseconomies of scale. Once such situation arises the business should stop the operation.
16.
Answer: e
Percentage change in quantity demanded = {(200 – 300) / 300} × 100
= (-100 / 300) × 100
= -33.33%
Percentage change in price = {($6 - $5) / $5} × 100
= (1 / 5) × 100
= 20%
Elasticity = Percentage change in quantity demanded / Percentage change in price
= -33.33% / 20%
= - 1.6665
= - 1.67 (by rounding)
17.
Answer: d
People used to search equal marginal utilities between products with their limited incomes.
18.
Answer: d
This is because of diseconomies of scale a firm becomes less efficient when it goes bigger. More and more factors give diminishing returns.
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