Question 1

While a firm can plan for the long run, it must always operate in the short run.

Accepted Answer

A) True 
 B)False

Question 2

The table below shows cost data for three different-sized plants---1, 2, and 3---which are the only three plants possible. $$\begin{array} { c c c c } 
\hline \text { Output } & \text { Plant 1 } & \text { Plant 2 } & \text { Plant 3 } \
\hline 200 & \$ 14 & \$ 16 & \$ 18 \
400 & 12 & 13 & 14 \
600 & 13 & 10 & 11 \
800 & 14 & 11 & 9 \
1000 & 15 & 14 & 11 \
\hline
\end{array}$$ a) In what plant size is MES achieved?
b) What is economic capacity for plant size 2?
c) What is the right-sized plant to produce an output of 400?

Accepted Answer

a) Plant 3...

Question 3

1, AC2, and AC3 are short-run average cost curves. B)  The long-run average cost curve illustrates both economies of and constant returns to scale. C)  Constant returns to scale exist between outputs Q4 and Q5. D)  Plant 3 achieves minimum efficient scale. E)  Both the short run and the long run are illustrated in this graph." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7.7 to answer this question. All of the following statements except one are correct. Which is the exception?

Accepted Answer

A)   AC1, AC2, and AC3 are short-run average cost curves.
B)   The long-run average cost curve illustrates both economies of and constant returns to scale.
C)   Constant returns to scale exist between outputs Q4 and Q5.
D)   Plant 3 achieves minimum efficient scale.
E)   Both the short run and the long run are illustrated in this graph.F) C) and D)
G) D) and E)

Question 4

In the graph below six short-run average cost curves labeled a through f are illustrated.
  
-Refer to the graph above to answer this question. Which set of short-run average cost curves illustrates constant returns to scale?

Accepted Answer

A)   a and b only.
B)   a, b and c only.
C)   a, b, c, and d.
D)   d and e only.
E)   e and f only.F) C) and E)
G) B) and D)

Question 5

What is the shape of the LRAC curve for a firm enjoying constant returns to scale?

Accepted Answer

The shape of the long-run aver...

Exam 7: Costs in the Long Run

What is the shape of the LRAC curve for a firm enjoying constant returns to scale?

Correct Answer
verified
The shape of the long-run aver...
View Answer

While a firm can plan for the long run, it must always operate in the short run.

Correct Answer
verified

-Refer to Figure 7.7 to answer this question. All of the following statements except one are correct. Which is the exception?

Correct Answer
verified

In the graph below six short-run average cost curves labeled a through f are illustrated. -Refer to the graph above to answer this question. Which set of short-run average cost curves illustrates constant returns to scale?

Correct Answer
verified

Correct Answer
verified
a) Plant 3...
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Exam 7: Costs in the Long Run

What is the shape of the LRAC curve for a firm enjoying constant returns to scale?

Correct AnswerverifiedThe shape of the long-run aver...View AnswerShow Answer

While a firm can plan for the long run, it must always operate in the short run.

Correct AnswerverifiedShow Answer

-Refer to Figure 7.7 to answer this question. All of the following statements except one are correct. Which is the exception?

Correct AnswerverifiedShow Answer

In the graph below six short-run average cost curves labeled a through f are illustrated. -Refer to the graph above to answer this question. Which set of short-run average cost curves illustrates constant returns to scale?

Correct AnswerverifiedShow Answer

Correct Answerverifieda) Plant 3...View AnswerShow Answer

Correct Answer
verified
The shape of the long-run aver...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a) Plant 3...
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