If the Firms in a Market Have Constant Returns to Scale

question 2

Multiple Choice

If the firms in a market have constant returns to scale internally while there are external economies of scale for the industry, a firm's long-run supply curve will be ________ and the long-run market supply curve will be ________.

• A) downward sloping; downward sloping
• B) upward sloping; horizontal
• C) horizontal; downward sloping
• D) downward sloping; horizontal
• E) upward sloping; downward sloping

---

Definitions:

Segment Margin

refers to the profit generated by a specific segment of a business, considering both direct and indirect costs attributed to that segment.

Allocated General Overhead

Refers to the portion of general expenses that are designated to specific projects or departments within an organization.

Special Equipment

Equipment specifically designed or required for particular processes or productions, often customized or unique to specialized operations.

Fixed Costs

Expenses that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.