At McDonald's, economies of scale at the firm level
a. can be traced to factors such as the use of centralized training and common menus for all restaurants
b. exist only in the short run
c. occur above the firm's minimum efficient scale
d. can be traced to the diminishing marginal productivity of a variable resource, such as labor
e. occur over the range of output for which the firm's total cost curve is upward sloping
QUESTION 2At McDonald's, economies of scale at the plant (or restaurant) level occur
a. over the range of output for which that restaurant's average cost curve is upward sloping
b. over the range of output for which that restaurant's average cost curve is horizontal
c. over the range of output for which that restaurant's average cost curve is downward sloping
d. at all levels of output
e. only in the short run
QUESTION 3Adopting a uniform menu across all sites provides the McDonald's Corporation __________ by spreading the cost of menu development over a large output.
a. economies of scale
b. diminishing returns
c. constant returns to scale
d. rising marginal product
e. more flexibility
QUESTION 4Which of the following indicates that economies of scale have been overridden by other factors?
a. A company seeking to save on architect's fees during its move to Maryland copies the same building it used in San Francisco, so now it occupies the only office in Baltimore built to withstand earthquakes.
b. The workers on the night shift at the Roadkill Diner, having no customers of their own, peel 400 potatoes, fill 300 catsup bottles, fry 100 pounds of bacon, and brew 80 quarts of coffee for the morning shift.
c. Denny's Restaurant serves potatoes with its breakfasts nationwide, but in the South you can get grits instead.
d. The Creepy Critters Summer Camp decides not to give campers a choice between hamburgers and hot dogs but makes creamed chipped beef on toast for everybody.
e. Henry Ford said that his customers could have any color car they wanted, as long as they wanted black.
QUESTION 5Minimum efficient scale is the level of output at which
a. short-run average total cost stops decreasing
b. short-run average total cost stops increasing
c. long-run average cost stops decreasing
d. long-run average cost stops increasing
e. profit stops increasing
QUESTION 6Generally, as a movie theater adds more screens its average costs fall. The movie theater can be said to experience
a. declining profit
b. higher prices
c. diseconomies of scale
d. economies of scale
e. diminishing marginal returns