Which of the following is most likely to be an increasing-cost industry?
a. An industry whose firms experience diseconomies of scale
b. An industry whose firms experience economies of scale
c. An industry that is a major buyer in the markets for the inputs it uses
d. An industry that is a very small buyer in the markets for the inputs it uses
e. An industry that is a major seller in the markets for its outputs
C
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With respect to Figure 3.1, the classicists argued that
a. the relevant aggregate supply curve is labeled B. b. the curves labeled B and G are both relevant during recessions. c. only the supply curve labeled M is important. d. None of the above
Which of the following explains most accurately why the firm's short-run marginal cost curve will eventually rise?
a. As more of the variable factor is used, its price will rise. b. When diminishing marginal returns set in, it will take ever-larger quantities of the variable resources to produce an additional unit of output. c. As the variable factor is used more intensely, its marginal product will rise, causing an increase in marginal costs. d. As the size of the firm increases, the operational efficiency of the firm declines, causing an increase in marginal costs.