When the Size of a Factory (And All Its Associated

question 125

Multiple Choice

When the size of a factory (and all its associated inputs) doubles and,as a result,output more than doubles,

• A)The law of diminishing returns must not apply in the smaller factory.
• B)Economies of scale must exist.
• C)The short-run ATC curve must be declining.

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Definitions:

Investments

The allocation of resources, such as time, money, or effort, in the expectation of generating an income or profit.

Market Value

The current price at which an asset or company could be bought or sold in the market.

GDP

Gross Domestic Product, the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

Final Goods

Products that are purchased for consumption by the end user and are not intended to be resold or used in the production of other goods.