A Firm Will Want to Increase Its Scale of Plant

question 104

Multiple Choice

A firm will want to increase its scale of plant if

• A)it is persistently producing on the upward-sloping part of its short-run average total cost curve.
• B)it is persistently producing on the downward-sloping part of its short-run average total cost curve.
• C)it is producing below minimum efficient scale.
• D)marginal cost is below average total cost.
• E)marginal cost is below average variable cost.

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Definitions:

Hedonistic Consumption

The pursuit of pleasure and sensory gratification from the consumption of goods and services.

Positive Reinforcement

A technique used in behavior modification that involves rewarding a behavior in order to increase the likelihood of its recurrence.

Unconditioned Response

An Unconditioned Response is an automatic, reflexive reaction to an unconditioned stimulus that occurs without prior learning or conditioning.

Product Line Extension

Involves adding new products to an existing product line to attract more customers or to capitalize on established reputations.