Suppose a Firm Doubles Its Output in the Long Run

question 26

Multiple Choice

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

• A) exploiting the economies of scale available to it.
• B) facing constant returns to scale.
• C) facing diseconomies of scale.
• D) not using the available technology efficiently.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level, at a specific time.

Black Market

An illegal market where goods or services are traded without compliance with legal requirements, often including the sale of illicit goods.

Illegal Trading

Unlawful transactions of goods or services that may involve insider trading, market manipulation, or trading of illegal items.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to market stability.