If an Industry's Long-Run Average Total Cost Curve Has an Extended

question 71

Multiple Choice

If an industry's long-run average total cost curve has an extended range of constant returns to scale,this implies that:

• A) technology precludes both economies and diseconomies of scale.
• B) the industry will be a natural monopoly.
• C) both relatively small and relatively large firms can be viable in the industry.
• D) the industry will be comprised of a very large number of small firms.

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Definitions:

Binding Quota

A limit on the quantity of goods that can be imported or exported over a period, which cannot be exceeded.

Japanese-Made Cars

Vehicles manufactured by automotive companies based in Japan, known for their reliability and technology.

Substitutes

Goods or services that can replace each other in use, where an increase in the price of one leads to an increase in demand for the other.

Quota Rent

The earnings that accrue to the holder of the right to import or export a product due to trade quotas.