When Long- Run Average Cost Decreases as Output Increases There

question 33

Multiple Choice

When long- run average cost decreases as output increases there are definitely
I. increasing marginal returns.
II. economies of scale.

• A) Only I
• B) Only II
• C) Both I and II
• D) Neither I nor II

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Definitions:

Short-Run Equilibrium

The condition in which supply and demand are equal at a particular price level, within a short time frame, before all variables have fully adjusted.

Profit-Maximizing

The process or goal of a firm to adjust its production and sale strategies to achieve the highest possible profits.

Four-Firm Concentration Ratio

A metric that measures the total market share controlled by the four largest firms within an industry, used to assess the competitiveness of the market.

Herfindahl Index

A measure of market concentration, calculating the sum of the squares of market shares of each firm within an industry.