Question 1

While a firm can plan for the long run, it must always operate in the short run.

Accepted Answer

A) True 
 B)False

Question 2

1, AC2, and AC3 are short-run average cost curves. B)  The long-run average cost curve illustrates both economies of and constant returns to scale. C)  Constant returns to scale exist between outputs Q4 and Q5. D)  Plant 3 achieves minimum efficient scale. E)  Both the short run and the long run are illustrated in this graph." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7.7 to answer this question. All of the following statements except one are correct. Which is the exception?

Accepted Answer

A)   AC1, AC2, and AC3 are short-run average cost curves.
B)   The long-run average cost curve illustrates both economies of and constant returns to scale.
C)   Constant returns to scale exist between outputs Q4 and Q5.
D)   Plant 3 achieves minimum efficient scale.
E)   Both the short run and the long run are illustrated in this graph.

Question 3

The table below shows cost data for three different-sized plants---1, 2, and 3---which are the only three plants possible. $$\begin{array} { c c c c } 
\hline \text { Output } & \text { Plant 1 } & \text { Plant 2 } & \text { Plant 3 } \
\hline 200 & \$ 14 & \$ 16 & \$ 18 \
400 & 12 & 13 & 14 \
600 & 13 & 10 & 11 \
800 & 14 & 11 & 9 \
1000 & 15 & 14 & 11 \
\hline
\end{array}$$ a) In what plant size is MES achieved?
b) What is economic capacity for plant size 2?
c) What is the right-sized plant to produce an output of 400?

Accepted Answer

a) Plant 3...

Question 4

What is the shape of the LRAC curve for a firm enjoying constant returns to scale?

Accepted Answer

The shape of the long-run aver...

Question 5

In the graph below six short-run average cost curves labeled a through f are illustrated.
  
-Refer to the graph above to answer this question. Which set of short-run average cost curves illustrates constant returns to scale?

Accepted Answer

A)   a and b only.
B)   a, b and c only.
C)   a, b, c, and d.
D)   d and e only.
E)   e and f only.

Exam 7: Costs in the Long Run

In the graph below six short-run average cost curves labeled a through f are illustrated. -Refer to the graph above to answer this question. Which set of short-run average cost curves illustrates constant returns to scale?

Correct Answer
verified

Correct Answer
verified
a) Plant 3...
View Answer

What is the shape of the LRAC curve for a firm enjoying constant returns to scale?

Correct Answer
verified
The shape of the long-run aver...
View Answer

-Refer to Figure 7.7 to answer this question. All of the following statements except one are correct. Which is the exception?

Correct Answer
verified

While a firm can plan for the long run, it must always operate in the short run.

Correct Answer
verified

Exam 7: Costs in the Long Run

In the graph below six short-run average cost curves labeled a through f are illustrated. -Refer to the graph above to answer this question. Which set of short-run average cost curves illustrates constant returns to scale?

Correct AnswerverifiedShow Answer

Correct Answerverifieda) Plant 3...View AnswerShow Answer

What is the shape of the LRAC curve for a firm enjoying constant returns to scale?

Correct AnswerverifiedThe shape of the long-run aver...View AnswerShow Answer

-Refer to Figure 7.7 to answer this question. All of the following statements except one are correct. Which is the exception?

Correct AnswerverifiedShow Answer

While a firm can plan for the long run, it must always operate in the short run.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
a) Plant 3...
View Answer

Correct Answer
verified
The shape of the long-run aver...
View Answer

Correct Answer
verified

Correct Answer
verified