Suppose There Are Two Firms That Make Automobiles, Ferrari and General

Multiple Choice

Suppose there are two firms that make automobiles, Ferrari and General Motors. Ferrari has one assembly plant with only a few hundred employees. General Motors has several assembly plants and thousands of employees. If there are economies of scale in automobile production, which statement is true?

A) General Motors should produce fewer cars to improve its efficiency.
B) Efficiency allows General Motors to use fewer raw materials per automobile.
C) The output level that makes Ferrari most efficient also makes General Motors most efficient.
D) When the ATC curves of the two firms cross, General Motor's ATC curve is falling.
E) The average fixed cost curve for Ferrari is higher because they produce fewer cars