Exam 6: Production and Cost Analysis in the Long Run

When a firm is experiencing economies of scale,the minimum point of the firm's short-run average total cost curve shifts down as it expands its scale of production.

According to the text there appear to be very limited opportunities for input substitution in the production of pipe organs.Which of the following is the most plausible explanation for this observation?

Much of the research on the minimum efficient scale suggests that for many firms,economies of scale are:

The fact that a firm is using a capital-intensive method of production means that input substitution is not possible.

An improvement in technology would cause each of the isoquants in a firm's isoquant map to shift out away from the origin.

Isoquants are convex to the origin due to:

A movement down along a given isoquant causes the marginal rate of technical substitution to:

Explain how "learning by doing" and transportation costs each affect the long-run average cost curve.

Use the firm's long-run cost-minimizing decision rule to explain the differences in the relative use of capital and labor in agriculture in the United States and the Peoples Republic of China.

A change in technology or the relative prices of the inputs used in a production process would cause a manager's choice of inputs to use in the production process to change as well.

Assume a new technology is developed that increases the productivity of capital and creates additional economies of scale.How would this affect the firm's minimum efficient scale of operation.Illustrate this effect graphically.

Which of the following statements about the beer industry is correct?

The fact that supermarkets,a land-intensive form of organization,have become the dominant form of grocery store in the United States suggests that:

Briefly summarize the empirical literature on the long-run costs typically incurred by firms in a variety of industries.In particular,is there reason to believe that firms' long-run cost curves assume the typical U-shape? Why or why not?

Which of the following is most likely to create diseconomies of scale?

Failure to account for the increased transportation costs that would result from building fewer and more centrally located production facilities could result in firm managers selecting a scale of operation that is larger than the optimum.

If an industry is characterized by substantial diseconomies of scale,as a particular firm in the industry expands its production capacity we will observe:

Assume the LRAC curve for a particular industry hits its minimum point at a relatively low level of output and then increases,and the demand for industry output is quite large.In this case,consideration of the minimum efficient scale of operation suggest that the market should be served by:

For the simple case of a production function with two inputs in which the inputs are perfect complements,each isoquant is represented by:

An increase in the number of people in the United States with health insurance could cause the cost of providing health care services to increase as the incentive for health care providers to minimize costs decreases.