Which of the Following Is Guaranteed by Increasing Returns to Scale

question 75

Multiple Choice

Which of the following is guaranteed by increasing returns to scale in production experienced in the long run?

• A)Negative marginal costs
• B)Zero average costs
• C)Declining average costs
• D)Rising marginal costs

Identify the primary forces encouraging the entry of new firms into purely competitive industries.

Describe the dynamic adjustments in supply and demand within various types of industries (decreasing-cost, increasing-cost, constant-cost) under changes in market conditions.

Analyze the cost structure and profitability (economic profits, losses, and normal profits) of firms operating in perfectly competitive markets.

Understand the concept of long-run adjustments in purely competitive markets including entry and exit of firms.

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Definitions:

Federal Income

Income subject to federal income tax, which includes earnings from various sources such as wages, interest, dividends, and capital gains, among others.

Current Liability

A company's debts or obligations that are due within one year or within the normal operating cycle.

Sales Tax

A tax levied by the government on the sale of goods and services.

Credit Sales

Credit sales are transactions where goods or services are provided to a customer with the agreement that payment will be made at a later date.