If a Firm Has a Long- Run Average Cost of $2

question 72

Multiple Choice

If a firm has a long- run average cost of $2 when it produces 4,000 units of an input and has a long- run average cost of $1 when it produces $10,000 units and the firm needs 10,000 units of the input, the firm_______ experience economies of scale, which makes the firm ________ likely to make the input rather than buy it.

• A)does; less
• B)does not; less
• C)does; more
• D)does not; more

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Definitions:

Cash Dividends

A disbursement of profits from a company to its owners or investors, usually as a profit-sharing mechanism.

Common Stock

Common Stock represents units of ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Asset

An economic resource owned or controlled by an individual, corporation, or country, expected to provide future benefits.

Par Value

The face value of a bond or stock as stated by the issuing company.