All these factors can lead to economies of scale in production, except:
a. division of labor that helps in specialization.
b. merger of two firms.
c. hiring larger machines which are more efficient than the smaller ones.
d. increase in overhead expenses.
e. research and development.
QUESTION 2Which of the following is characteristic of a perfectly competitive market?
a. There is free entry into and exit from the market.
b. Individual firms can exert a perceptible influence on the market price.
c. Firms in the market produce a differentiated product.
d. All of the above are true.
QUESTION 3If the production of 2,000 cars and 500 tons of corn during a year is economically efficient for a country which produces only these two products, which of the following conclusions can be drawn?
a. It satisfies domestic demand completely.
b. The production of cars can not be increased without reducing the production of corn.
c. The reallocation of resources to change the production level must reduce production of both goods.
d. It is possible to increase the production of both if resources can be reallocated.
QUESTION 4The market for renewable resources often fail to allocate the resources to their highest-valued uses.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5The long-run average total cost curve represents:
a. the maximum cost of producing any level of output when all the factors are fixed.
b. the lowest cost of producing any level of output when all the factors are variable.
c. the maximum cost of producing any level of output when all the factors are variable.
d. the lowest cost of producing any level of output when all the factors are fixed.
e. the lowest cost of producing any level of output when at least one factor is fixed.
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