If the Minimum Efficient Scale in Woodstove Production Is 200,000

question 24

Multiple Choice

If the minimum efficient scale in woodstove production is 200,000 units per year,_____

• A)the long-run average cost of producing 50,000 stoves is greater than the average cost of producing 100,000 stoves.
• B)the long-run average cost of producing 50,000 stoves is equal to the average cost of producing 100,000 stoves.
• C)the long-run total cost of producing 50,000 stoves is greater than the total cost of producing 100,000 stoves.
• D)the firm should not produce more than 200,000 woodstoves each year.
• E)the short-run marginal cost exceeds the short-run average cost at 200,000 stoves.

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Definitions:

Oral Contract

An agreement between parties spoken and agreed to aloud rather than written, yet is legally binding.

Consideration

The benefit, interest, right, or profit involved in an agreement or contract, on which it is based.

Statute of Frauds

A legal concept requiring certain types of agreements to be executed in writing and signed by the parties involved to be enforceable.

Collateral Promises

Agreements that are secondary to a primary transaction or promise, often requiring the backup of an asset as security.