Suppose That a Firm's Long-Run Average Total Costs of Producing

question 613

Multiple Choice

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

• A)economies of scale.
• B)constant returns to scale.
• C)diseconomies of scale.
• D)specialization.

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Definitions:

Effective Annual Rate

The interest rate that is adjusted for compounding over a given period, representing the actual annual return on an investment.

Semi-annually Return

The return on an investment calculated twice a year, showing the investment's performance over each six-month period.

Investment

The allocation of resources, such as capital, time, or effort, in hope of generating a gain or profit in the future.

Fat Tails

Refers to the occurrences of extreme movements in stock prices or higher than normal risks in investments, which lead to heavy tails in a probability distribution.