In the above figure, for any output level less than Q2, this firm experiences
A. decreasing long run average costs.
B. diseconomies of scale.
C. constant economies of scale.
D. economies of scale.
Answer: D
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Which of the following is NOT true of adverse selection?
A) It would not exist in a world of perfect information. B) It arises because borrowers typically know more than lenders. C) It describes a lender's problem of distinguishing the good-risk applicants from the bad-risk applicants. D) It describes a lender's problem in verifying borrowers are using their funds as intended.
A firm's net worth is equal to the value of its
A) assets minus the value of its liabilities. B) liabilities minus the value of its assets. C) common stock minus the value of its outstanding bonds. D) outstanding bonds minus the value of its common stock.