Exam 6: Production and Cost Analysis in the Long Run

Which of the following statements concerning the long-run average cost (LRAC)curve is correct?

Over the past several decades, technological change has led to a significant amount of consolidation in the U.S.brewing industry.

The negatively-sloped part of the long-run average total cost curve is due to which of the following?

An isocost line represents:

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:

In which of the following situations would a firm be more likely to rely on a capital-intensive method of production?

In which of the following examples cited in the text is there the least amount of evidence of the potential for input substitution?

The "minimum efficient scale" of operation in an industry is defined as:

A labor-intensive method of production is one that:

Evidence suggests that as the amount of market power possessed by the firms in an industry increases, the amount of X-inefficiency will decrease.

Regarding the production of health care, more recent studies suggest that:

Regarding the production of health care, more recent studies suggest that economies of scale exist up to a hospital size of approximately 200 beds.

Which of the following is least likely to limit the ability of a firm to minimize production costs?

Most of the empirical research on long-run costs suggests that the long-run average cost curve for most firms has a very pronounced U-shape.

Diseconomies of scale are illustrated by:

An increase in the amount of competition with other firms that employ "best practices" would be likely to cause a particular firm's labor productivity to:

In the long-run production function, all of the inputs to the production process are allowed to vary.

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.

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

In the long-run average cost function, only the amount of capital is allowed to vary.