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Author Question: How do constant returns to scale affect the shape of the long-run average cost curve? What will ... (Read 91 times)

Mr.Thesaxman

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on: Jun 29, 2018
How do constant returns to scale affect the shape of the long-run average cost curve?
 
  What will be an ideal response?

Question 2

Refer to Figure 19-10. Under the Bretton Woods System of exchange rates, if the par exchange rate was 2 per pound in the figure above, and equilibrium persisted at 3, then a revaluation of the currency would have
 
  A) led to a balance of trade surplus.
  B) increased the price of imports to Britain.
  C) led to a current account surplus.
  D) increased the price of British exports to the United States.


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babybsemail

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Reply #1 on: Jun 29, 2018
Answer to Question 1

When the firm faces constant returns to scale, average costs per unit produced remain constant as the firm's scale of production rises. Thus, the long-run average cost curve would be horizontal.

Answer to Question 2

D


Mr.Thesaxman

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

adf223

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Reply 3 on: Yesterday
Gracias!

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