If Output Is Increased in the Long Run, Average Production

question 25

Multiple Choice

If output is increased in the long run, average production costs in the presence of internal diseconomies of scale will ________, and in the presence of external diseconomies of scale, will ________.

• A) decrease; decrease
• B) increase; remain constant
• C) remain constant; increase
• D) decrease; remain constant
• E) increase; decrease

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Definitions:

World Production

encompasses the total output of goods and services by all economies across the globe over a specific period.

Self-Sufficient

The ability to fulfill all of one's needs without relying on external assistance.

Comparative Advantage

The ability of a country, individual, company, or region to produce a particular good or service at a lower opportunity cost than others.

Absolute Advantage

The ability of a country or firm to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.