Economics Week 3 Review
If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.
decreasing returns to scale
A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________, regardless of the level of production.
fixed costs; do not change
In microeconomics, which of the following is synonymous with economies of scale?
increasing returns to scale
In the _________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _____________________.
short run; losses are smallest
In the _________, the perfectly competitive firm will seek out ________________________.
short run; the quantity of output where profits are highest
In order to determine the average variable cost, the firm's variable costs are divided by _______________________.
the quantity of output
Which term describes a situation where the quantity of output rises, but the average cost of production falls?
economies of scale
Idaho farmers can sell as large a quantity of their potato crop as they wish, if which of the following is true?
Each farmer willingly accepts the prevailing market price.
If a perfectly competitive firm is a price taker, then which of the following is true?
Pressure from competing firms will force acceptance of the prevailing market price.
Why are some producers forced to sell their products at the prevailing market price?
They have a high degree of similarity to competitors products.
