A Firm That Has Diminishing Returns in the Management's Ability

question 134

Multiple Choice

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run BEST demonstrates:

• A)economies of scale.
• B)diseconomies of scale.
• C)being too small for the relevant market.
• D)not having enough managers.

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Definitions:

ATC Curves

Graphs that illustrate the average total cost of production at different levels of output.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profitability of a firm beyond normal profit levels.

Marginal Revenues

Represents the additional income generated from the sale of one more unit of a good or service.

Total Revenues

The gross revenue obtained from merchandise or service transactions before removing any operational expenses.