Which of the following is a reason why a firm would experience diseconomies of scale?
Select one:
a. As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations.
b. To finance an increase in the size of its plant a firm must borrow more m...
ECON 528 - ULL - Final Exam Questions
& Answers
Which of the following is a reason why a firm would experience diseconomies of scale?
Select one:
a. As the size of the firm increases, it becomes more difficult to find markets where it
doesn't already have operations.
b. To finance an increase in the size of its plant a firm must borrow more money or sell
more shares of stock.
c. As the size of the firm increases, it must operate in other countries where differences
in language, customs and laws increase its average costs.
d. As the size of the firm increases it becomes more difficult to coordinate the
operations of its manufacturing plants. - ANSWERSd. As the size of the firm increases it
becomes more difficult to coordinate the operations of its manufacturing plants.
The minimum efficient scale is
Select one:
a. the plant size that yields the most profit.
b. level of operation where long-run average costs are lowest.
c. the level of output where diminishing returns have not set in yet.
d. the smallest output level where the firm finally reaches productive efficiency. -
ANSWERSb. level of operation where long-run average costs are lowest.
scale?
Select one:
a. Larger firms may be able to purchase inputs at lower costs than smaller competitors.
b. Technology can make it possible to increase production with a smaller increase in at
least one input.
c. Workers and managers can become more specialized, enabling them to be more
productive.
d. As output increases, the managers can begin to have difficulty coordinating the
operations of their firms. - ANSWERSd. As output increases, the managers can begin to
have difficulty coordinating the operations of their firms.
Economies of scope exist between book publishing and magazine publishing if
Select one:
a. the cost of publishing a magazine is lower for book publishers than for other firms.
b. the cost of a publishing a book is not subject to diminishing marginal returns.
c. the cost of publishing a magazine is lower for firms that publish many magazines than
for firms that publish only one magazine.
d. the cost of publishing a book falls over time as the publisher acquires more
experience. - ANSWERSa. the cost of publishing a magazine is lower for book
publishers than for other firms.
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