When the Average Cost of a Typical Firm Declines as the Output

question 18

Multiple Choice

When the average cost of a typical firm declines as the output of the industry within a geographic area increases it is referred to as:

• A)internal scale economies.
• B)external scale economies.
• C)internal scale diseconomies.
• D)constant returns to scale.

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Definitions:

Quantity Demanded

The total amount of goods or services that consumers are willing and able to purchase at a specific price level.

Quantity Supplied

The volume of a good or service available for sale from suppliers at a certain cost.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers from prices that are deemed too high.

Shortage/Surplus

A shortage occurs when the demand for a good exceeds its supply at a particular price, while a surplus occurs when the supply of a good exceeds demand at a particular price.