When a Firm Produces a Small Amount of Output,the Spreading

question 4

Multiple Choice

When a firm produces a small amount of output,the spreading effect:

• A)is stronger than the diminishing returns effect.
• B)is weaker than the diminishing returns effect.
• C)and the diminishing returns effect are equal.
• D)is zero.

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Definitions:

Import or Export

The practice of buying goods or services from foreign suppliers (importing) or selling goods or services to foreign buyers (exporting).

World Price

The cost of a product or service in the international marketplace, dictated by supply and demand across the globe.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount that they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, usually due to market prices.