When a Firm Experiences Steadily Declining Long-Run Average Total Costs

question 44

Multiple Choice

When a firm experiences steadily declining long-run average total costs as it produces more output, it is known as a(n)

• A) oligopoly.
• B) rent seeker.
• C) natural monopoly.
• D) monopolistic competitor.

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Definitions:

Output

Output refers to the amount of goods or services produced by a firm or economy within a certain period.

Physical Capital

Consists of tangible, man-made objects that a business uses to produce goods or services, such as buildings, machinery, and equipment.

Short Run

A period in economics where at least one factor of production is fixed, limiting the ability of the economy or firm to adjust to changes in demand or supply.

Productive

Relating to or involving the creation of goods or services that satisfy human wants; the efficiency and effectiveness in producing outputs from inputs.