Increasing Returns to Scale for a Firm Is Shown Graphically

question 18

Multiple Choice

Increasing returns to scale for a firm is shown graphically by

• A)an upward- sloping long- run average cost curve.
• B)a vertical long- run average cost curve.
• C)a horizontal long- run average cost curve.
• D)a downward- sloping long- run average cost curve.
• E)None of the above; returns to scale have nothing to do with the shape of the long- run average cost curve.

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Definitions:

Rational Self-Interest

The principle that individuals tend to make decisions that they perceive to be the best for their own welfare and success.

Collude

A secret or illegal cooperation or conspiracy, especially between parties to deceive or defraud others.

Reserve Price

A reserve price is the minimum price a seller is willing to accept for an item at auction; if bids do not reach this price, the item is not sold.

Private Values

A situation in auctions where the value of an item is known only to the bidder, not affecting the valuation of the item by other bidders.