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.

---

Definitions:

Capital Markets

Financial markets for buying and selling equity and debt instruments, catering to the long-term funding needs of public and private sector enterprises.

Primary Markets

Markets in which new securities are issued and sold by corporations directly to investors.

Over-The-Counter

A decentralized market where securities are traded directly between parties without the supervision of an exchange.

Financial Intermediaries

Institutions that facilitate the flow of funds between savers and borrowers, thereby making investment more accessible.