Where along the long-run average total cost curve will an efficient firm try to produce in the long run?
a. Along the downward-sloping portion when there are economies of scale because cost per unit of output is decreasing at that level of production.
b. Along the upward-sloping portion when there are diseconomies of scale because a firm will sell more output at that level of production.
c. When there are constant returns to scale because this is the minimum efficient level of production, and cost per unit of output is at its lowest.
Ans: c. When there are constant returns to scale because this is the minimum efficient level of production, and cost per unit of output is at its lowest.
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According to this Application, based on the analysis of the sources of growth in China and India, and assuming that nothing changes, it can be concluded that
A) there is convergence between the nations in Asia. B) China's reliance on technology for economic growth makes it less likely to keep pace with the growth rate in India. C) India's long-term growth prospects are not as strong those for China. D) the growth rate in China should significantly slow down in the near future, but the growth rate in India will continue to rapidly increase in the near and distant future.
Two brands of water, Natural Water and Mountain Water, are close substitutes. If the price of Mountain Water decreases, the fall in price
A) shifts the demand curve for Natural Water rightward. B) shifts the demand curve for Natural Water leftward. C) increases the price of Natural Water. D) increases the demand for Mountain Water. E) More information is needed to determine if the demand curve for Natural Water shifts rightward or leftward.