40) When a decrease in the scale of production leads to higher average costs, the industry exhibits A) diminishing returns. B) decreasing returns to scale. C) constant returns to scale. D) increasing returns to scale.

Q: Suppose a firm has chosen its quantity so that its marginal cost isequal to the market price, and is…

A: Known fact:Economies of scale: The economies of scale is a situation in which output can be doubled…

Q: Marginal cost is the:  rate of change in total fixed cost that results from producing one more unit…

A: Marginal cost by definition is the cost incurred for producing an extra unit of the good or…

Q: Order the following components of a long run average cost curve as output expands based on which…

A: In the long-run, an average cost curve shows different phases of production when average cost…

Q: Relate the law of diminishing returns to a firm’s short-run production costs.

A: The short-run is the period where few factors of production are fixed and few are variable.…

Q: Costs which increase with an increase in output are called________________ Costs which do not…

A: There are two main components of the total cost(TC) that a firm incurs. One is the variable cost(VC)…

Q: Diseconomies of scale occur when:A) average total cost increases as output increases.B) average…

A: The process of production is the combining of the raw materials and the skills and knowledge of the…

Q: Economies and diseconomies of scale explain: Group of answer choices the profit-maximizing level of…

A: Economies of scale are the point at which the expense per unit of creation (Average expense)…

Q: The differences between average total costs and average variable costs declines as a firms output…

A: The difference between average total cost and average variable cost declines as a firms output…

Q: Which of the following would increase a firm's average total costs? economies of scale an increase…

A: Average Total Cost: The average total cost (ATC) is the per-unit cost of producing goods and…

Q: Consider the following hypothetical firm that is normally producing 200 units of the product per…

A: Variable costs  are costs that extrade because the extent changes. Examples of variable costs are…

Q: Fixed costs are best defined as costs that do not vary with output. the amount that one more unit of…

A: Fixed Cost: It is the cost that is incurred for purchasing fixed factors of production. It is…

Q: Question 18 The upward sloping portion of a long-run cost curve illustrates: Diminishing marginal…

A:

Q: Water and electricity used in manufacturing company is an example of: A Manufacturing overhead -…

A: The markets are the place where the buyers of various goods, and services tend to meet and interact…

Q: If producing more output increases average cost then         a)there are diseconomies of scale.…

A: Answer to the question is as :

Q: A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of…

A: By doubling the inputs that are employed in producing the good, will not increase the variable cost…

Q: A firm is producing 20 units with an average total cost of $25 and marginal cost of $15. If it were…

A: Costs are the expenses that firms have to incur in all of their production activities.

Q: Diseconomies of scale occur mainly because

A: Diseconomies of scale is associated with the increasing cost per unit with increase in the scale of…

Q: Fixed costs of production in the short run: a. Are low in proportion to variable costs in the short…

A: The firm can increase production by changing its factor of production. However, the production scale…

Q: A long run total cost curve   a.   must be equal to zero when output is zero   cross out…

A: In the mentioned question we have been asked what will be the value of long-run total cost if the…

Q: When a firm doubles its inputs and finds that its output has more than doubled, this is known as а.…

A: Inputs and output are important for business. Inputs are raw materials, equipment, and machinery…

Q: ) The short run is a time period in which: (a) all resources are fixed.…

A: In economics, we study the interaction and the decision-making of the economic agents at the…

Q: If an increase in output size results in reductions in average costs, this is known as:…

A: An increase in the level of production increases the size of the output. This leads to a fall in the…

Q: Which of the following results from bureaucratic red tape, breakdown of top-to-bottom communication,…

A: The Diseconomies of scale are the consequence that occurs because of bureaucratic red tape,…

Q: When a firm experiences increasing returns to scale a. its AFC will decrease. b. its AFC will…

A: Total cost (TC): - it is the sum of fixed and variable costs incurred in the production process.…

Q: Distinguish between the short-run and long-run production decisions and illustrate their impact on…

A: Meaning of Production Function: The term production function refers to the situation under when a…

Q: A firm’s short-run marginal cost______________________________.   increases with output remain…

A: By definition, marginal cost refers to the additional amount of cost which the firm has to bear for…

Q: The MC curve crosses the ATC curve at ATC's minimum, because A. ATC is falling when MCATC B. ATC is…

A: Marginal cost refers to change in total cost with respect to change in output. Average total cost is…

Q: Q3) At its best possible output level, a firm has total revenue of Rs. 7000 per day and total cost…

A: A firm should continue to produce till it is able to cover its variable costs, and should resort to…

Q: Which of the following is wrong? Select one: a. Economies of scale refer to the production of two or…

A: Long run average cost curve is locus of minimum point of the short run average cost curve.

Q: Q45 When a factory is operating at the level of output where its short-run average total cost is at…

A: Short-run average expense (SRATC/SRAC) approaches average fixed expenses in addition to average…

Q: A firm has the following total revenue and total cost schedules: TR = $3Q. TC = $4,000 + $1.7Q.…

A: Break-even is the point at which revenue and total costs are equal, indicating that the business is…

Q: The long-run ATC curve is often called the firm’s:   a. planning curve. b. capital-expansion path.…

A: The long-run average total cost curve is known to be a metric that indicates the average cost of the…

Q: Minimum efficient scale for production of a good or service: Select correct one : a) is the point…

A: Answer: option c (is the rate of output at which long-run average costs reach a minimum)…

Q: 35) Long-run cost curves are U-shaped because A) of the law of demand. C) of economies and…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: In the long run, if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of…

A: Given that, 1,000 units are produced at a cost of $8,000 and  1,200 units are produced at a cost of…

Q: Distinguish between short-run and long-run production decisions and illustrate their impact on costs…

A: Average cost is total cost divided by total production while marginal cost is the change in total…

Q: Variable costs are         sunk costs.        costs that change every day.        costs that change…

A: Total Cost refers to all expenses involved in producing a good or providing a service.  It has two…

Q: Q15 _____ cost declines over the whole range of output. a. Average variable. b. Total variable. c.…

A: Total fixed cost (TFC): - it is the cost incurred on the fixed capital assets like land, building,…

Q: The cost that cannot be recovered if a firm goes out of business is known as __________. a. Cost of…

A: If a firm goes out of business then some of the costs can not be recovered such as Advertising…

Q: When a firm triples its inputs and finds that its output has less than tripled this is known as:…

A: Production function is a definite mathematical relation between factor inputs and output generated,…

Q: The output level at which long-run costs are minimised is known as: (a)  Average fixed cost; (b)…

A: Total cost is the cost incurred by the firm on hiring factors of production to produce the final…

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.