36) A firm encountering economies of scale over some range of output will have a:
a) rising long-run average cost curve.
b) falling long-run average cost curve.
c) constant long-run average cost curve.
d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
a) economies of scale.
b) constant returns to scale.
c) diseconomies of scale.
d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:
a) economies of scale.
b) normative economies.
c) diminishing marginal returns.
d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:
a) economies of scale. b) constant returns to scale.
c) diseconomies of scale. d) increasing average total costs.



40) Economies and diseconomies of scale explain why the:
a) short-run average fixed cost curve declines so long as output increases.
b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.
c) long-run average total cost curve is typically U-shaped.
d) short-run average variable cost curve is U-shaped.

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36 A firm encountering economies of scale over some range of output will have a b falling longrun average cost curve Longrun average costs are falling ... View the full answer