"If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you
agree or disagree? Explain.
What will be an ideal response?
Disagree. If the minimum efficient scale is between 2,000 and 4,000 units of output, then the average costs are the same for any firm producing within that output range. This means that the firm producing 2,000 units of output has no cost-saving advantage over the firm producing 4,000 units of output.
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When aggregate demand increases, there is a movement ________ along the AS curve and ________
A) up; an upward shift of the short-run Phillips curve B) down; a movement down along the short-run Phillips curve C) up; a movement up along the short-run Phillips curve D) up; a movement down along the short-run Phillips curve E) down; a downward shift of the short-run Phillips curve
Refer to Figure 4-8. With rent control, the quantity supplied is 200 apartments. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get per month?
A) $1,000 B) $1,500 C) $2,000 D) $2,300