Which of the Following Indicates That a Firm Is Experiencing Economies of Scale?

Which of the following indicates that a firm is experiencing economies of scale?

(A)The firm’s long-run supply curve is horizontal.

(B)The firm’s long-run marginal cost increases as output increases.

(C)The firm’s long-run average total cost decreases as output increases.

(D)The firm’s long-run total cost decreases as output increases.

(E)The firm’s total revenues increase as output sold increases.

Which of the following must be true if a firm is experiencing economies of scale?

(A)All costs are explicit.

(B)Long-run average total cost decreases as the firm's output increases.

(C)Economic profits decrease as the firm's output increases.

(D)Long-run average total cost remains constant as the firm's output decreases.

(E)Proportionate increases in inputs result in less-than-proportionate increases in output.

What is going down as output goes up if a firm is experiencing economies of scale?

(A)Total fixed cost

(B)Long-run average total cost

(C)Long-run total cost

(D)Short-run marginal cost

(E)Short-run marginal revenue

Which of the following is a result of increasing returns to sale?

(A)Upward-sloping short-run marginal cost curve

(B)Downward-sloping marginal physical product of labor curve

(C)Downward-sloping long-run average total cost curve

(D)Diseconomies of scale

(E)Diminishing returns

A farmer grows corn using two inputs: capital and land. If he triples his inputs, he finds that the quantity of corn produced more than triples. Therefore, it must be true that in this production range his long-run average total cost curve is

(A)negatively sloped

(B)positively sloped

(C)horizontal

(D)vertical

(E)U-shaped

What will occur if a firm is experiencing economies of scale and they increase output?

(A)Its short-run average total costs will go up.

(B)Its long-run average total costs will go down.

(C)Its long-run average total costs will go up.

(D)Its short-run total costs will go down.

(E)Its long-run total costs will go down.

If the firm produces at Q2 with two inputs being used, what will the firm experience in the short-run and in the long-run?

(A)Short-Run = Increasing Marginal Returns ; Long-Run = Economies of Scale

(B)Short-Run = Increasing Marginal Returns ; Long-Run = Diseconomies of Scale

(C)Short-Run = Decreasing Marginal Returns ; Long-Run = Diseconomies of Scale

(D)Short-Run = Decreasing Marginal Returns ; Long-Run = Economies of Scale

(E)Short-Run = Constant Marginal Returns ; Long-Run = Diseconomies of Scale

When is the long-run average cost curve downward sloping for a firm?

(A)When it experiences diminishing marginal returns.

(B)When it experiences decreasing returns to scale.

(C)When it experiences constant returns to scale.

(D)When it experiences economies of scale.

(E)When it experiences diseconomies of scale.

If a firm's long-run average total cost goes down as output goes up, the firm is experiencing

(A)economies of scale

(B)diseconomies of scale

(C)decreasing returns to scale

(D)efficiency of capacity

(E)minimum economic profit

When do economies of scale exist?

(A)When the long-run average total cost decreases as output goes up.

(B)When the long-run average total cost curve increases as output goes up.

(C)When the short-run average total cost curve stays the same as output goes up.

(D)When the short-run average total cost curve decreases as output goes up.

(E)When the tripling of all inputs triples the output produced.

How can economic efficiency be increased by a merger of two firms?

(A)output going down to decrease marginal cost and even out price

(B)average total cost going down because of economies of scale

(C)economic profits going up but consumer surplus going down

(D)consumer surplus going up by reducing economic profits

(E)consumer surplus going up through a rightward shift of demand for the product