In the Short Run, a Firm Will Eventually Experience Rising

question 150

Multiple Choice

In the short run, a firm will eventually experience rising average total costs because of

• A) economies of scale.
• B) diseconomies of scale.
• C) the law of supply.
• D) the law of diminishing returns.

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Definitions:

World of Trade

An encompassing term that refers to the global network of buyers, sellers, markets, and exchanges involved in the production, distribution, and consumption of goods and services.

Personal Selling

The two-way flow of communication between a buyer and a seller that is designed to influence the buyer’s purchase decision.

Economies of Scale

The reduction in per-unit cost achieved by an increase in production volume, allowing businesses to spread fixed costs over more units.

Mass Customization

A strategy that allows consumers to personalize specific aspects of a product while still producing it in large volumes, combining the benefits of mass production with individual customization.