When There Are Economies of Scale

question 42

Multiple Choice

When there are economies of scale,

• A) MC > AC, so cost-output elasticity is greater than AC.
• B) MC < AC, so cost-output elasticity is less than AC.
• C) MC < AC, so cost-output elasticity is greater than 1.
• D) MC < AC, so cost-output elasticity is less than 1.
• E) long-run marginal cost is declining.

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Definitions:

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity of that good consumers are willing to buy.

Long-Run Equilibrium

A state in economics where all factors of production and economic variables are in balance, and no external pressures are causing change.

Marginal Cost

The additional expenditure required to produce one more unit of a product or service.

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies with changes in the quantity of goods or services sold.