Exhibit 12-8 the Long-Run Total Cost Schedule of a Perfectly

question 75

Multiple Choice

Exhibit 12-8 The long-run total cost schedule of a perfectly competitive firm that produces walnuts is as follows:
Refer to Exhibit 12-8.A firm expanding from producing 1,000 to 2,000 pounds of walnuts in the long run is experiencing:

• A) diseconomies of scale.
• B) economies of scale.
• C) an increasing average fixed cost.
• D) constant returns to scale.

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Definitions:

Unit Contribution Margin

The amount that the sale of one unit contributes towards covering fixed costs, calculated as the sales price per unit minus variable costs per unit.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Advertising Campaign

A series of advertisement messages that share a single idea and theme intended to achieve specific business objectives.

Contribution Margin Ratio

A measure of how a company's sales revenue contributes to covering its variable costs.