In the Long Run Firms Will Expand as Long as There

question 276

Multiple Choice

In the long run firms will expand as long as there are more ________, and new firms will enter the industry as long as they earn ________.

• A) economies of scale; zero profits
• B) economies of scale; positive economic profits
• C) diseconomies of scale; zero profits
• D) diseconomies of scale; positive economic profits

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Definitions:

Direct Labor Hour

A direct labor hour measures the actual time spent by workers directly involved in the production of goods or services, used for costing and operational efficiency.

Insurance Costs

Expenses associated with purchasing insurance policies to protect against risks.

Straight-line Depreciation

A method of allocating an asset's cost evenly across its useful life.

Per-unit Cost

The cost incurred to produce, maintain, or sell one unit of a product or service, calculated by dividing total costs by the number of units.