The Figure Below Shows a Family of Cost Curves for a Firm.The

question 57

Multiple Choice

The figure below shows a family of cost curves for a firm.The subscripts 1,2,and 3 for the SRATC curves refer to different plant sizes.
FIGURE 8- 3
-Refer to Figure 8- 3.Suppose this firm is producing output level Q3 with plant size 2.Now suppose this firm changes to plant size 3 and is producing output level Q5.We can say that

• A)this firm has experienced economies of scale.
• B)the firm is then operating with the optimal plant size.
• C)output has increased less than in proportion to the increase in inputs.
• D)output has increased more than in proportion to the increase in inputs.
• E)output has increased exactly in proportion to the increase in inputs.

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Definitions:

Trade Decisions

The choices made by individuals or governments regarding the import and export of goods and services, influenced by factors like costs, demand, and trade policies.

Small-Economy Assumption

An analytical approach assuming a country is small enough that its policies do not affect global markets, used to simplify economic analysis.

International Trade

The trade of products and services across national borders.

World Price

The international market price of a good or service, influenced by global supply and demand conditions.