How do decreasing returns to scale affect the shape of the long-run average cost curve?
What will be an ideal response?
When the firm faces decreasing returns to scale, average costs per unit produced rise as the firm's scale of production rises. Thus, the long-run average cost curve would be upward sloping.
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If, at the firm's projected sales level, the marginal cost is $40, the average cost is $50 and the markup is 30 percent, then its selling price is
A) $40. B) $50. C) $52. D) $65.
When a firm is experiencing economies of scale, it will:
a. underuse a larger plant size than is indicated by short-run efficiency concerns. b. underuse a smaller plant than is indicated by short-run efficiency concerns. c. overuse a larger plant size than is indicated by short-run efficiency concerns. d. overuse a smaller plant size than is indicated by short-run efficiency concerns. e. produce at the minimum short-run and long-run average costs.