If a firm's short-run average cost curves are u-shaped, does this imply that the long-run average cost curve must also be u-shaped?
What will be an ideal response?
No. The short-run average cost curves are u-shaped because of gains from division of labor in the beginning and then diminishing returns due to the fixed scale of production in the short run. In the long run, the firm is able to change its scale of production so no diminishing returns occur. Thus, the shape of the long-run average cost curve depends on whether the firm faces increasing, constant, or decreasing returns to scale.
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If French consumers spend 720 billion euros on consumption goods but French producers only produced 700 billion euros of consumption goods, then
a. French exports must have increased by 20 billion euros b. wanted inventories in France end up sold as consumption goods c. actual investment will be more than intended investment d. actual investment will be the same as intended investment e. intended investment will be realized
Wage negotiations in baseball can fit the bilateral monopoly situation when a star player negotiates with an owner. Explain how collective bargaining would be used in wage negotiations and the role of player strikes