When economies of scale exist, a decrease in the level of output will lead to:
a. a decrease in cost per unit.
b. an increase in cost per unit.
c. no change in cost per unit.
d. an increase in total cost.
b
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Suppose early Friday morning the economics club buys 200 donuts at 25 cents each, and plans to sell all of them later in the day on campus for 50 cents each
Only 60 donuts are sold at 50 cents, however, and by early afternoon the club is seen trying to unload the remaining donuts for 10 cents each. What can we conclude? A) The club was clearly engaging in predatory pricing of donuts. B) The club was clearly selling below cost. C) The club clearly misjudged the demand for donuts. D) All of the above are true.
To reduce economic volatility the Fed should push the economy toward a
A) positive output ratio. B) negative output ratio. C) zero output ratio. D) All of the above are consistent with reduced volatility.