A Firm That Is Not on the Cost-Responsiveness Efficient Frontier

question 28

Multiple Choice

A firm that is not on the cost-responsiveness efficient frontier can improve

• A)both responsiveness and cost performance.
• B)only responsiveness.
• C)only cost performance.
• D)responsiveness,but not cost performance.

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Definitions:

Economies Of Scale

Exist when average costs fall as output increases.

Diseconomies Of Scale

Exist when average costs rise with output.

Marginal Costs

The cost associated with producing one additional unit of a product, useful for decision-making on production levels and pricing.

Constant Returns To Scale

When average costs are constant with respect to output level.