Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?
Economies of scale exist when a firm increases its scale of operations and lower per unit costs of production are experienced. Diseconomies of scale exist when a firm increases its scale of operations and higher per unit costs of production are experienced. If economies of scale are extensive we would expect to find a small number of very large firms operating within the industry. Conversely, if diseconomies of scale set in relatively early, we would expect to find a large number of relatively small firms operating within the industry.
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The graph which represents the distribution of income in an economy is called the
A) Laffer curve. B) Lorenz curve. C) distribution curve. D) aggregate demand curve.
The Phillips curve illustrates the relationship between:
a. change in the money supply and change in unemployment. b. tax rates and tax revenues. c. the equilibrium level of income and the employment rate. d. inflation and unemployment.