Question : 11) In the long run, if 1,000 units produced at : 1226145

11) In the long run, if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200, then over this range of output there are

A) constant economies of scale.

B) constant returns to scale.

C) diseconomies of scale.

D) economies of scale.

E) constant diseconomies of scale.

12) Diseconomies of scale is

A) a short run phenomenon.

B) the result of decreasing marginal returns.

C) a long run phenomenon.

D) the result of increasing marginal returns.

E) possible only when the firm’s plant size is fixed.

13) A firm decreases its scale of operation and discovers that its long-run average costs decrease. Which of the following does this indicate?

A) Labor’s marginal product has increased.

B) Diseconomies of scale were absent in the larger plant.

C) The firm’s scale initially was so large that it experienced diseconomies of scale.

D) The firm’s scale initially was too small to experience economies of scale.

E) Its long-run marginal cost was smaller with the larger plant than with the smaller plant.

14) Diseconomies of scale is a result of

A) mismanagement.

B) difficulties of coordinating and controlling a large enterprise.

C) specialization of labor, capital, and management.

D) technological progress.

E) larger fixed costs as the firm’s production increases.

15) When a firm becomes so large it is difficult to coordinate and control, it is most likely that

A) economies of scale have begun.

B) diseconomies of scale have begun.

C) average total cost begins to fall.

D) long-run average costs become negative.

E) there is increasing marginal returns to increasing the firm’s plant size.

16) The long run average cost curve

A) is the sum of a firm’s short run average cost curves.

B) shows the lowest average cost facing a firm as it increases output changing both its plant and labor force.

C) initially rises when output increases and then falls when output increases.

D) always falls as output increases.

E) always rises as output increases.

17) What does the long-run average cost curve show?

A) the interaction between average fixed cost and marginal cost

B) the lowest average cost to produce each output level in the long run

C) the distinction between long-run fixed and long-run variable costs

D) the lowest average marginal cost of producing each output level at any time.

E) Answers A, B, and C are correct.

18) The long-run average cost curve is U-shaped because of which of the following?

A) decreasing marginal returns as more labor is hired

B) constant fixed costs as output is increased

C) economies and diseconomies of scale

D) increasing marginal returns as more labor is hired

E) decreasing average fixed costs as output is increased

19) The long-run average cost curve

A) is an upside down U-shape.

B) is constructed using the short-run marginal cost curves.

C) shows economies and diseconomies of scale.

D) Both answers A and B are correct.

E) Both answers A and C are correct.

20) The portion of the long-run average cost curve in which economies of scale are experienced shows that as output increases, the

A) average total cost decreases.

B) average total cost increases.

C) marginal cost increases.

D) marginal cost decreases.

E) average variable cost is constant and the average fixed cost decreases.