A Firm Is Producing 10,000 Units of Output at a Total

question 151

Multiple Choice

A firm is producing 10,000 units of output at a total cost of $5,000. If the firm increases output by 5,000 units and its total costs rise by $2,000, the firm has:

• A) economies of scale.
• B) economies of scope.
• C) constant returns to scale.
• D) diseconomies of scale.

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Definitions:

Natural Person

A living human individual recognized by law as having rights and obligations, as opposed to a legal entity like a corporation.

Limited Partnerships

A form of partnership consisting of one or more general partners, who manage the business and are personally liable for its debts, and one or more limited partners, who contribute capital and share profits but take no part in running the business and incur no liability beyond their investment.

Good-faith Effort

An honest attempt or endeavor made in a sincere and honest effort, without intent to defraud or seek unfair advantage.

Defective Merchandise

Products that are flawed or malfunctioning and do not meet the warranted or expected standard of performance or safety.