When the Long-Run Average Cost Curve Is Downward Sloping

question 209

Multiple Choice

When the long-run average cost curve is downward sloping,

• A) economies of scale are present.
• B) diseconomies of scale are present.
• C) the firm experiences constant returns to scale.
• D) the average fixed cost curve must be upward sloping.
• E) The premise of the question is wrong because long-run average cost curves never slope downward.

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Definitions:

Junk Bonds

High-yield bonds with a lower credit rating than investment-grade bonds, reflecting a higher risk of default.

Industrial-Development Bond

A government-issued bond to support the development of industrial projects, often tax-exempt for the buyer.

Revenue Bond

A type of municipal bond supported by the revenue from a specific project or source, rather than general tax revenues.

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A type of municipal bond that is secured by the full faith and credit of the issuing government, including its taxing power to repay the bondholders.