Figure 13-9 the Figure Below Depicts Average Total Cost Functions for a for a Firm

question 124

Multiple Choice

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
-Refer to Figure 13-9. At levels of output between M and N, the firm experiences

• A)economies of scale.
• B)diseconomies of scale.
• C)constant returns to scale.
• D)both the benefits of specialization and diminishing marginal productivity.

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Definitions:

Automatic Stabilizers

Economic policies and programs, such as unemployment insurance and progressive taxes, designed to automatically adjust in response to economic conditions and stabilize the economy.

Business Cycle

The economic fluctuations experienced over time, characterized by periods of expansion (growth) and contraction (recession) in economic activity.

Legislative Action

The process by which a legislative body takes official steps to introduce, amend, pass, or reject laws and regulations.

Crowding-Out Effect

The phenomenon where increased government spending leads to a reduction in private sector spending, often due to higher interest rates.