The Table Given Below Shows the Average Total Cost of Production

question 14

Multiple Choice

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5

-If long-run costs are plotted on the vertical axis and the quantity of output is plotted on the horizontal axis, a line that is perfectly horizontal implies:

• A)constant returns to scale.
• B)economies of scale.
• C)diseconomies of scale.
• D)inefficient use of capital.
• E)inefficient use of labor.

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Definitions:

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, in a given time period.

Labor Demand

The total amount of workers that employers are willing and able to hire at a given wage rate within an economy.

Compensating Differentials

Wage differentials that arise to compensate workers for the desirability or undesirability of a job's characteristics.

Job Characteristics

Encompass the attributes, roles, responsibilities, and overall environment of a particular job that influence the job holder's motivation and satisfaction levels.