In the Long Run a Company That Produces and Sells

question 364

Multiple Choice

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

• A)diseconomies of scale because total cost is rising as output rises.
• B)constant returns to scale because average total cost is constant as output rises.
• C)diseconomies of scale because average total cost is rising as output rises.
• D)economies of scale because average total cost is falling as output rises.

Determine the role of substitutes and complements in affecting demand.

Understand the implications of perfectly inelastic and perfectly elastic demand curves.

Recognize the significance of time in determining price elasticity of demand.

Identify factors affecting the price elasticity of demand, including availability of substitutes.

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Definitions:

Transcontinental Railroads

Railroad lines that cross a continent, facilitating long-distance travel and transportation of goods across vast distances.

Civil War

A war between groups within the same country or state, often rooted in political, ethnic, or social differences.

Great Depression

A severe worldwide economic downturn that lasted from 1929 to the late 1930s, marked by massive unemployment and the fall of global trade.

Unemployment Rate

The percentage of the labor force that is without a job and actively looking for employment.