Constant returns to scale indicate that a firm is experiencing:
a. per unit costs of production that are decreasing as the scale of output expands.
b. per unit costs of production that remain stable as the scale of output expands.
c. per unit costs of production that are increasing as the scale of output expands
d. an increasing marginal product.
QUESTION 2An investor who wants to diversify his portfolio will buy only bonds when both stocks and bonds are expected to yield better returns.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3The ____ heuristic observes that when facts are at issue the correct answer is often the one people recognize, and the incorrect answer is the one they do not.
a. representative
b. availability
c. recognition
d. elimination
QUESTION 4As the price of a good declines, a utility-maximizing consumer will respond by purchasing more of that good.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5When there are diseconomies of scale in production:
a. long-run average total cost declines as output expands.
b. long-run average total cost increases as output expands.
c. average fixed cost increases as output expands.
d. marginal cost decreases as output expands.
QUESTION 6When the interest rate on alternative investments rise, it becomes costly for the bondholders to retain their bonds with them.
a. True
b. False
Indicate whether the statement is true or false
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