Question 1

Diseconomies of scale occur when

Accepted Answer

Diseconomies of scale occur when long-run average total costs rise as output increases. This can be due to various factors such as increased complexity of coordination and management, communication difficulties, and decreased motivation and efficiency of workers.

Question 2

When a firm is experiencing diseconomies of scale, long-run

Accepted Answer

The answer of When a firm is experiencing diseconomies of...

Question 3

In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. For this range of output, the coffee shop exhibits

Accepted Answer

The answer of In the long run the local coffee...

Question 4

When a firm experiences constant returns to scale,

Accepted Answer

Constant returns to scale means that when all inputs are increased by the same proportion, output increases by the same proportion. This leads to no change in long-run average total cost since inputs and outputs are increased by the same proportion.

Question 5

Firms may experience diseconomies of scale when

Accepted Answer

Diseconomies of scale occur when a firm grows so large that its costs per unit increase. This often happens due to bureaucratic inefficiencies in large management structures, where decision-making becomes slower and more complex.

Question 6

In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits

Accepted Answer

The answer of In the long run a company that...

Question 7

Constant returns to scale occur when the firm's long­run

Accepted Answer

Constant returns to scale means that as output increases, the firm's average total cost remains constant. This implies that the firm is able to increase its output without any increase in per-unit costs. Therefore, the correct choice is B - average total costs are constant as output increases.

Question 8

Diseconomies of scale occur when a firm's

Accepted Answer

Diseconomies of scale occur when a firm's long-run average total costs are increasing as output increases. This can happen due to issues such as communication breakdowns, management difficulties, or inefficiencies in coordinating operations as the firm becomes larger.

Question 9

In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits

Accepted Answer

The cost per unit is increasing as output increases, indicating that the company is experiencing diseconomies of scale.

Question 10

When a firm experiences diseconomies of scale,

Accepted Answer

When a firm experiences diseconomies of scale, it means that as output increases, the cost per unit of production increases. This can be caused by various factors such as a lack of coordination among departments, difficulty in managing a large workforce, and increased bureaucratic costs. As a result, the long-run average total cost of production increases as output increases.

Question 11

Suppose that a firm's long­run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

Accepted Answer

The fact that the long-run average total cost remains constant as the firm expands its output from 1,000 to 1,200 returns indicates that the firm is experiencing constant returns to scale. This means that the firm is able to increase its output by a certain proportion while keeping its average cost constant. Therefore, it is not experiencing economies nor diseconomies of scale. Specialization is not relevant to this scenario.

Question 12

At low levels of production, the firm

Accepted Answer

The answer of At low levels of production, the firm
...

Question 13

Which of the following statements is not correct?

Accepted Answer

Economies of scale is a long-run concept, not a short-run concept.

Question 14

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

Accepted Answer

The answer of The Big Blue Sky jet company has...

Question 15

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Accepted Answer

Constant returns to scale means that increasing all inputs by a certain proportion results in an equal proportionate increase in output. This means the firm's cost per unit of output remains constant as output increases. Thus, its long-run average total cost curve would be horizontal as the cost per unit remains the same at all levels of output.

Question 16

Constant returns to scale occur when a firm's

Accepted Answer

Constant returns to scale occur when long-run average total costs do not vary as output increases. This means that a firm can increase its production without experiencing any increase in average costs per unit. It is not related to changes in marginal costs or long-run average total cost curves.

Question 17

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Accepted Answer

The answer of In the long run a company that...

Question 18

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

Accepted Answer

When marginal cost is above average total cost, it means that each additional unit costs more than the previous unit on average. This indicates that the firm is experiencing diseconomies of scale - as production increases, the cost per unit is increasing. This is shown by a rising average total cost curve.

Question 19

In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits

Accepted Answer

The answer of In the long run a company that...

Question 20

When a firm's long­run average total costs do not vary as output increases, the firm exhibits

Accepted Answer

When a firm's long-run average total costs do not vary as output increases, the firm exhibits constant returns to scale. This means that the firm is able to maintain the same level of efficiency and cost structure regardless of the scale of production.

Quiz 13: The Costs of Production

Diseconomies of scale occur when

When a firm is experiencing diseconomies of scale, long-run

In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. For this range of output, the coffee shop exhibits

When a firm experiences constant returns to scale,

Firms may experience diseconomies of scale when

In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits

Constant returns to scale occur when the firm's longrun

Diseconomies of scale occur when a firm's

In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits

When a firm experiences diseconomies of scale,

Suppose that a firm's longrun average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

At low levels of production, the firm

Which of the following statements is not correct?

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Constant returns to scale occur when a firm's

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits

When a firm's longrun average total costs do not vary as output increases, the firm exhibits

Quiz 13: The Costs of Production

Diseconomies of scale occur when

When a firm is experiencing diseconomies of scale, long-run

In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. For this range of output, the coffee shop exhibits

When a firm experiences constant returns to scale,

Firms may experience diseconomies of scale when

In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits

Constant returns to scale occur when the firm's long­run

Diseconomies of scale occur when a firm's

In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits

When a firm experiences diseconomies of scale,

Suppose that a firm's long­run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

At low levels of production, the firm

Which of the following statements is not correct?

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Constant returns to scale occur when a firm's

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits

When a firm's long­run average total costs do not vary as output increases, the firm exhibits

Constant returns to scale occur when the firm's longrun

Suppose that a firm's longrun average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

When a firm's longrun average total costs do not vary as output increases, the firm exhibits