Quiz 6

Which of the following provides the best explanation for diseconomies of scale? Increased specialization Diminishing marginal productivity Monitoring costs Indivisible setup costs

Monitoring costs

Which of the following is most likely to be an example of economies of scale? The per-unit costs on Excel Publishing Company's manuals fall because it adopted a new technology after receiving a large order from the government. Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs. Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant. The XYZ Co. increased production 25 percent after a 30 percent increase in all inputs.

The per-unit costs on Excel Publishing Company's manuals fall because it adopted a new technology after receiving a large order from the government.

A new fertilizer has been discovered that significantly increases the corn crop yield per acre. As a result, the farmers': average total cost curves become downward-sloping. long-run average total cost curve becomes flatter. average total cost curve shifts downward. cost curves do not change their shape or position.

average total cost curve shifts downward.

To manufacture 1,000 pairs of shoes in a week, a firm must use at least 1,500 workers and 5 machines or 100 machines and 150 workers. Which method can be technically efficient? 1,500 workers and 5 machines 150 workers and 100 machines both neither

both

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC3 minimizes: both long-run and short-run average total cost. long-run average total cost only. short-run average total cost only. neither long-run nor short-run average total cost.

both long-run and short-run average total cost.

Refer to the graph shown. The output range in region b is associated with: diminishing marginal productivity. constant returns to scale. economies of scale. diseconomies of scale.

constant returns to scale.

Refer to the graph shown. The shift from SATC3 to SATC4 reflects: economies of scale. diseconomies of scale. diminishing marginal productivity. increasing marginal productivity.

diseconomies of scale.

The upward-sloping part of the long-run average cost curve is explained by: indivisible setup costs. diseconomies of scale. output levels that exceed the minimum efficient level of production. decreasing marginal productivity.

diseconomies of scale.

Refer to the graph shown. The output range in region a is associated with: increasing marginal productivity. constant returns to scale. economies of scale. diseconomies of scale.

economies of scale.

Refer to the graph shown.A shift from SATC1 to SATC2 reflects: economies of scale. diseconomies of scale. diminishing marginal productivity. increasing marginal productivity.

economies of scale.

If a firm is able to lower total costs by specializing in marketing and distribution while outsourcing production, it is taking advantage of: less developed nations. economies of scope. economies of scale. technical efficiency.

economies of scope.

Given that there are significant economies of scale involved in making flat screen television sets, the cost of manufacturing a flat screen television set most likely will: rise as the industry matures. fall as the industry matures. remain the same as the industry matures. rise whether the industry matures or not.

fall as the industry matures.

Economies of scope cannot exist in: the presence of economies of scale. the presence of diseconomies of scale. firms that produce a single product. firms that produce multiple products.

firms that produce a single product.

Refer to the graph shown. The graph exhibits economies of scale: in region a. in region b. in region c. over the entire range of output.

in region a.

Suppose the average total cost of producing semiconductors in a factory of a particular size declines over time as more semiconductors are produced. This drop in average total cost might best be explained by: economies of scale. economies of scope. learning by doing. diminishing marginal productivity.

learning by doing.

Globalization has made economies of scope: more important to firms because global corporations can segment the production process. more important to firms because global corporations do not have to segment the production process. less important to firms because global corporations can segment the production process. less important to firms because global corporations do not have to segment the production process.

more important to firms because global corporations can segment the production process.

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC2 minimizes: both long-run and short-run average total cost. long-run average total cost only. short-run average total cost only. neither long-run nor short-run average total cost.

neither long-run nor short-run average total cost.

Since capital is relatively scarce in India, the economically efficient method of producing food would probably: be land-intensive. be capital-intensive. not be labor-intensive. not be capital-intensive.

not be capital-intensive.

ABC Co. produces only gadgets, and XYZ Co. produces both gadgets and widgets. If ABC Co. produces gadgets at the same average total cost as XYZ Co., economies of: scope are present in ABC. scale are present in ABC. scale are not present in XYZ. scope are not present in XYZ.

scope are not present in XYZ.

"For-benefit" corporations are created to pursue multiple goals, such as profitability, social responsibility, and value for the broader society. These firms provide examples of: non-entrepreneurial thinking. long-run efficiency. technical inefficiency. social entrepreneurship.

social entrepreneurship.

If technological innovation occurs when a firm is experiencing diseconomies of scale: the long-run average total cost curve will shift down but still will rise as output expands. long-run average total costs will remain the same as output expands. short-run average total costs will fall as output expands. product prices will rise, leading to inflation.

the long-run average total cost curve will shift down but still will rise as output expands.