Figure 13-9 the Figure Below Depicts Average Total Cost Functions for a for a Firm

question 279

Multiple Choice

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
-Refer to Figure 13-9. At levels of output less than M, the firm experiences

• A)economies of scale.
• B)diseconomies of scale.
• C)constant returns to scale.
• D)both diminishing marginal productivity and coordination problems.

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Definitions:

Marginal Benefit

The additional satisfaction or utility gained by consuming an additional unit of a good or service.

Marginal Cost

The extra expense involved in creating an additional unit of a product or service.

Constant Marginal Costs

A situation where the cost of producing one more unit of a good or service remains unchanged regardless of the volume of production.

Marginal Cost

The rise in overall expenses associated with producing an extra unit of a product or service.