A. If $ e_{c}1 $, increasing returns to scale and decreasing average costs are inchcated.
B. Average cost exceeds marginal cost at the minimum efficient scale of plant.
C. When total fixed cost and price are held constant, a rechiction in average variable cost will typically cause a reduction in the breakeven activity level.
D. Anincrease in total fixed cost will alwaysincrease the degree of operatingleverage for firms maling a positive net profit.
E. When longrun average cost is decreasing it can pay to operate smaller plants at their peak efficiency rather than larger plants with some excess capacity.

Question

A. If $ e_{c}>1 $, increasing returns to scale and decreasing average costs are inchcated.
B. Average cost exceeds marginal cost at the minimum efficient scale of plant.
C. When total fixed cost and price are held constant, a rechiction in average variable cost will typically cause a reduction in the breakeven activity level.
D. Anincrease in total fixed cost will alwaysincrease the degree of operatingleverage for firms maling a positive net profit.
E. When longrun average cost is decreasing it can pay to operate smaller plants at their peak efficiency rather than larger plants with some excess capacity.

Quizplus · Accepted Answer

The Answer of  
A. If $ e_{c}>1 $, increasing returns to scale and decreasing average costs are inchcated.
B. Average cost exceeds marginal cost at the minimum efficient scale of plant.
C. When total fixed cost and price are held constant, a rechiction in average variable cost will typically cause a reduction in the breakeven activity level.
D. Anincrease in total fixed cost will alwaysincrease the degree of operatingleverage for firms maling a positive net profit.
E. When longrun average cost is decreasing it can pay to operate smaller plants at their peak efficiency rather than larger plants with some excess capacity.

A If ec>1 e_{c}>1 ec​>1 , Increasing Returns to Scale and Decreasing Average Costs Are

A If $e_{c}>1$ , Increasing Returns to Scale and Decreasing Average Costs Are