A decreasing-cost industry will have? a.a downward sloping supply curve in the l
ID: 1253640 • Letter: A
Question
A decreasing-cost industry will have?a.a downward sloping supply curve in the long run
b.an upward sloping demand curve in the long run
c.a perfectly elastic long-run supply curve
d.a perfectly inelastic long-run supply curve
Which of the following is the best example of a decreasing-cost industry?
a.the health care industry
b.the college-education industry
c.the oil industry
d.the personal computer industry
The lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum is
a.constant returns of scale
b.economies of scale
c.diseconomies of scael
d.minimum efficient scale
Which of the following would NOT be a short-run decision for the firm?
a.place an order with a supplier for additional raw materials
b.recall workers who were previously laid-off
c.build another wing on the plant in order to add a new assembly line
d.have labor work two hours overtime each day in order to expand output
Explanation / Answer
1) ans is A. In the long run, the average cost will be lower, thus, the supply curve will go downwards. 2) ans is D. As time proceeds on, health care becomes more expensive, supply of oil decreases so oil becomes more expensive, college education costs increases and computer parts become cheaper due to technological advancements 3) ans is D. Minimum efficient scale occurs at the lowest point of the LRAC curve. 4) ans is C. This is the only long run decision as this factor cannot be implemented and counted as variable costs in the short run. In the long run, this becomes a variable cost.