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

question 40

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 Q 3 with plant size 2.Now suppose this firm changes to plant size 3 and is producing output level Q 5.We can say that

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

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Definitions:

Value-Added Tax

A type of consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

Production

The method of blending different tangible and intangible inputs (like designs and expertise) to create products for use.

Administrative Burden

A term that refers to the costs and regulatory obligations businesses face when complying with government rules and procedures.

Tax Forms

Official documents used to report financial information to the government for tax purposes, including income, expenses, and taxes owed.