Author Question: "The bigger the volume, the lower the cost, and we pass these savings on to you" is a familiar ... (Read 85 times)

shanell · **on:** Oct 12, 2022

Question 1

Suppose a firm experiences decreasing returns to scale. This is shown graphically by
◦ a downward-sloping long-run average cost curve.
◦ a downward-sloping long-run marginal-cost curve.
◦ a horizontal long-run average cost curve.
◦ an upward-sloping long-run average cost curve.
◦ an increasing marginal product curve.

Question 2

"The bigger the volume, the lower the cost, and we pass these savings on to you" is a familiar advertising slogan. It implies essentially that the
◦ average fixed cost will decline or remain constant over the long run.
◦ consumer is able to pay less today because the total cost of the firm is expected to decline tomorrow.
◦ firm is altruistic.
◦ total cost of the firm will remain constant as output expands.
◦ firm expects to experience increasing returns over the relevant range of output.

breounasmoot · **Reply #1 on:** Oct 12, 2022

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