21.Iflong-runaveragetotalcostdecreasesasthequantityofoutputincreases,thefirmisexperiencing
a.economiesofscale.
b.diseconomiesofscale.
c.coordinationproblemsarisingfromthelargesizeofthefirm.
d.fixedcostsgreatlyexceedingvariablecosts.
22.Inthelongrunacompanythatproducesandsellspopcornincurstotalcostsof$1,050whenoutputis90canistersand$1,200whenoutputis120canisters.Thepopcorncompanyexhibits
a.diseconomiesofscalebecausetotalcostisrisingasoutputrises.
b.diseconomiesofscalebecauseaveragetotalcostisrisingasoutputrises.
c.economiesofscalebecausetotalcostisrisingasoutputrises.
d.economiesofscalebecauseaveragetotalcostisfallingasoutputrises.
23.Inthelongrunacompanythatproducesandsellscandybarsincurstotalcostsof$1,200whenoutputis2,400candybarsand$1,400whenoutputis2,900candybars.Thecandybarcompanyexhibits
a.diseconomiesofscalebecausetotalcostisrisingasoutputrises.
b.diseconomiesofscalebecauseaveragetotalcostisrisingasoutputrises.
c.economiesofscalebecausetotalcostisrisingasoutputrises.
d.economiesofscalebecauseaveragetotalcostisfallingasoutputrises.
24.Supposethatafirm’slongrunaveragetotalcostsofproducingtelevisionsdecreasesasitproducesbetween10,000and20,000televisions.Forthisrangeofoutput,thefirmisexperiencing
a.economiesofscale.
b.constantreturnstoscale.
c.diseconomiesofscale.
d.coordinationproblems.
25.Sincethe1980s,Wal-MartstoreshaveappearedinalmosteverycommunityinAmerica.Wal-Martbuysitsgoodsinlargequantitiesand,therefore,atcheaperprices.Wal-Martalsolocatesitsstoreswherelandpricesarelow,usuallyoutsideofthecommunitybusinessdistrict.ManycustomersshopatWal-Martbecauseoflowprices.Localretailers,liketheneighborhooddrugstore,oftengooutofbusinessbecausetheylosecustomers.Thisstorydemonstratesthat
a.consumersdonotreacttochangingprices.
b.therearediseconomiesofscaleinretailsales.
c.thereareeconomiesofscaleinretailsales.
d.therearediminishingreturnstoproducingandsellingretailgoods.
26.Whichofthefollowingstatementsisnotcorrect?
a.Inthelongrun,therearenofixedcosts.
b.Marginalcostisindependentoffixedcosts.
c.Economiesofscaleisashort-runconcept.
d.Diminishingmarginalproductexplainsincreasingmarginalcost.
27.Inthelongrunacompanythatproducesandsellslaundrydetergentincurstotalcostsof$2,500whenoutputis1,250unitsand$2,750whenoutputis1,500units.Forthisrangeofoutput,thelaundrydetergentcompanyexhibits
a.economiesofscale.
b.constantreturnstoscale.
c.diseconomiesofscale.
d.efficientscale.
28.Atlowlevelsofproduction,thefirm
a.benefitsfromincreasedsizebecauseitcantakeadvantageofgreaterspecialization.
b.hasthepotentialforeconomiesofscale.
c.isunlikelytoexperiencesacuteproblemswithcoordination.
d.Alloftheabovearecorrect.
29.TheBigBlueSkyjetcompanyhaslong-runtotalcostsof$20millionifitproduces5jetsandlong-runtotalcostsof$24million ifit produces6 jets.TheBigBlueSkyjetcompanyisexperiencing
a.economiesofscale.
b.constantreturnstoscale.
c.diseconomiesofscale.
d.negativeprofits.
30.Whenafirmexperiencesconstantreturnstoscale,
a.long-runaveragetotalcostisunchanged,evenwhenoutputincreases.
b.long-runmarginalcostisgreaterthanlong-runaveragetotalcost.
c.long-runmarginalcostislessthanlong-runaveragetotalcost.
d.thefirmislikelytoexperiencecoordinationproblems.
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