Which of the following will NOT cause increasing returns to scale and declining average costs?
a. focusing on a single product line and specializing
b. exporting goods to other countries
c. selling more in their home market
d. hiring more workers at the existing plant
Ans: d. hiring more workers at the existing plant
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Refer to the graph above. Assume that D1 and S1 are the initial demand for and supply of dollars. Suppose that Britain's demand for dollars increases from D1 to D2. If the British government wishes to fix the exchange rate at the initial level, one possible way to do this is for the government to:
The graph below shows the supply and demand curves for dollars in the pound/dollar market.
A. Buy and add more to its dollar reserves
B. Sell pounds in exchange for U.S. dollars
C. Encourage the British to import more U.S. products
D. Sell some of its dollar reserves
Assume milk is used to produce ice cream. Ceteris paribus, a decrease in the price of milk will cause the equilibrium price of ice cream to
A. Increase and the equilibrium quantity of ice cream to decrease. B. Decrease and the equilibrium quantity of ice cream to increase. C. Decrease and the equilibrium quantity of ice cream to decrease. D. Increase and the equilibrium quantity of ice cream to increase.