Suppose a Firm Is in a Range of Production Where

question 199

Multiple Choice

Suppose a firm is in a range of production where it is experiencing economies of scale. Knowing this, we can predict that

• A)the long-run average total cost curve is upsloping.
• B)a 10 percent increase in all inputs will increase output by less than 10 percent.
• C)a 10 percent increase in all inputs will increase output by more than 10 percent.
• D)the firm is encountering problems of managerial bureaucracy because of its size.

---

Definitions:

Durbin-Watson Test

A statistical test used to detect the presence of autocorrelation at lag 1 in the residuals from a regression analysis.

First-Order Autocorrelation

The correlation between values in a series and their immediate predecessors, often used to detect patterns or trends in time series data.

Durbin-Watson Statistic

Utilized to check for the presence and intensity of autocorrelation between residuals in linear regression models.

Negative Autocorrelation

A situation in a time series where current values are inversely related to previous values, meaning increases lead to future decreases and vice versa.