At a Particular Output Level, If a Firm's Long- Run

question 49

Multiple Choice

At a particular output level, if a firm's long- run marginal cost is $8 and its long- run average cost is $10, the firm is likely to be experiencing_______ .

• A)economies of scale
• B)constant returns to scale
• C)diseconomies of scale
• D)sunk costs

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Definitions:

Competitive Price-Taker

A market participant that accepts the prevailing market price because the firm has no influence over market conditions.

Homogeneous Product

A product that is considered the same across different producers with no differentiation in the eyes of the consumer.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Homogeneous Product

A product that is seen as identical across producers, with no distinct differences from the consumer's perspective, leading to perfect competition.