Question : 21) Refer to Figure 8-10. Identify the minimum efficient scale : 1245247

21) Refer to Figure 8-10. Identify the minimum efficient scale of production.

A) Qa

B) Qb

C) Qc

D) Qd

22) In the long run

A) the firm’s fixed costs are greater than its fixed costs in the short run.

B) all of the firm’s costs are explicit costs; there are no implicit costs of production.

C) the firm is more profitable than it is in the short run.

D) all of the firm’s costs are variable costs.

23) Which of the following statements regarding a firm’s long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

A) The shape of the LRATC is affected by the law of diminishing returns.

B) The SRATC, but not the LRATC, can be used by a firm’s managers for planning.

C) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed.

D) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

24) If a firm’s long-run average total curve shows that it can produce 5,000 DVDs at an average cost of $2.00 and 15,000 DVDs at an average cost of $1.50 this is evidence of

A) diminishing returns.

B) economies of scale.

C) diseconomies of scale.

D) the law of supply.

25) Economies of scale occur when

A) a firm’s long-run average total costs fall as it increases the quantity of output it produces.

B) the marginal product of labor is greater than the average product of labor.

C) short-run marginal cost falls.

D) the demand for a firm’s output increases.

26) If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

A) minimum efficient scale.

B) more than minimum efficient scale.

C) less than minimum efficient scale.

D) minimum capacity.

27) If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, then the expansion would provide ________ to the airlines.

A) economies of scale

B) diseconomies of scale

C) higher average costs but lower total costs

D) higher marginal costs but lower total costs

28) Which of the following is not a reason why firms experience economies of scale?

A) Technology can make it possible to increase production with a smaller increase in at least one input.

B) Workers and managers can become more specialized, enabling them to be more productive.

C) Larger firms may be able to purchase inputs at lower costs than smaller competitors.

D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

29) Diseconomies of scale occur when

A) long-run average costs rise as a firm increases its output.

B) long-run average cost fall as a firm expands its plant size.

C) short-run average costs rise as a firm expands its plant size.

D) long-run labor costs rise as a firm increases its output.

30) A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

A) a long-run production function.

B) a long-run marginal cost curve.

C) a minimum efficient scale curve.

D) a long-run average total cost curve.