In recent years, the number of farms has fallen while the average farm size has increased. What concept may explain this phenomenon?
a. diminishing marginal returns
b. declining productivity
c. diseconomies of scale
d. economies of scale
e. good weather in midwestern states
QUESTION 2Someone once said that Chevrolet is so large that if it shakes its tail, its takes two years for its head to notice it. This is an example of
a. profit centers
b. economies of scale
c. diseconomies of scale
d. diminishing marginal returns
e. diminishing marginal cost
QUESTION 3The minimum efficient scale for a firm is the
a. lowest rate of output at which long-run average cost is at a minimum
b. lowest rate of output at which short-run average total cost is at a minimum
c. lowest rate of output at which short-run average variable cost is at a minimum
d. average of the rates of output at which long-run average cost is at a minimum
e. average of the rates of output at which short-run average total cost is at a minimum
QUESTION 4Economies of scale can be caused by
a. all of the following
b. short-run increases in marginal productivity
c. the use of larger, more specialized machines
d. higher information costs as a firm expands
e. bureaucratic red tape as a firm expands
QUESTION 5To maximize profit in the long run, a firm must
a. charge the highest price possible
b. produce where demand is unit elastic
c. sell the most output possible
d. minimize the cost of producing any given amount of output
e. produce at minimum long-run total cost
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