Exam 7: Costs in the Long Run

-Refer to the graph above to answer this question.Between what output levels do constant returns to scale exist?

Which of the following statements is correct if a firm builds a large plant and,at economic capacity output,its short-run average cost increases?

What is the shape of the long-run average cost curve under conditions of economies of scale?

-Refer to the graph above to answer this question.Which of the following statements is correct?

Economies of scale are divided into those cost advantages that are technical and those that are pecuniary.

Below is short-run cost data for four different plant sizes.Plant 2 has exactly twice as many inputs as does Plant 1.Plant 3 has exactly three times as many inputs as does Plant 1 and Plant 4 has exactly four times as many inputs as does Plant 1. -Refer to the information above to answer this question.Which of the following should the firm consider doing if it is currently producing an output of 40 using Plant 2?

What is the long-run average cost curve?

Explain how the long run average cost curve is derived.

What is the shape of the LRAC curve for a firm enjoying diseconomies of scale?

Assume that a firm's total cost of producing an output of 300 units is currently $30,000.If output increases to 600 units,total cost increases to $60,000 and the price of inputs and technology remain unchanged,state whether constant returns to scale,economies of scale or diseconomies of scale exist in this case.

Define minimum efficient scale.

The ability of a person to supervise 12 workers just as well as 8 is an example of:

Which of the following statements is correct?

What does the term "decreasing returns to scale" mean?

Assume that a firm's total cost of producing an output of 2,000 units is currently $20,000.If output increases to 2,500 units,total cost increases to $50,000 and the price of inputs and technology remain unchanged.What will be the effect on average total cost?

Can a firm size be too large?

Suppose that Jump A Lot Inc.can produce 20 trampolines a day for a total cost of $2,400.If technology and input prices remain the same and total cost increase to $4,800,what must be the new quantity of output per day under conditions of: a)constant returns to scale? ______________________ b)economies of scale? ______________________ c)diseconomies of scale ________________________

What does MES refer to?

Which of the following statements is correct if a firm builds a larger plant and,at any particular output,its short-run average cost increases?

A firm's economic capacity and its most productive output level are the same.