When Firm X Doubled Its Output, It Was Found That

question 57

Multiple Choice

When firm X doubled its output, it was found that its cost per unit declined by 10%. It can be concluded that:

• A)the firm was facing external scale diseconomies.
• B)the firm was enjoying internal scale economies.
• C)the firm was operating on the inelastic portion of the demand curve.
• D)the marginal cost of production at the initial output level was constant.

---

Definitions:

Inflation

The tempo at which the collective cost of goods and services rises, impairing the purchasing potential.

Unemployment Insurance

A government program that provides temporary financial assistance to unemployed workers who have lost their jobs through no fault of their own.

Nominal Rate

The interest rate before adjustments for inflation. It is the rate that is quoted by banks and other financial institutions for savings accounts, loans, and mortgages.

Inflation

A general increase in prices across an economy, leading to a decrease in the purchasing power of money.