Which of the Following Is a Reason Why Firms Can

question 301

Multiple Choice

Which of the following is a reason why firms can be more efficient than markets as coordinators of economic activity?

• A) economies of scale and scope
• B) higher transactions charges
• C) elimination of the principal-agent problem
• D) all of the above

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Definitions:

Total Cost

The complete cost of production that includes both fixed and variable costs incurred in creating goods or services.

ATC

Stands for Average Total Cost, which is the total cost per unit of output produced by a firm.

Marginal Cost

Marginal cost is the increase or decrease in the total cost of a production run for making one additional unit of an item.

Marginal Revenue

The additional revenue that a business gains from selling one more unit of a product or service.