Chapter 5 Production Technology and Cost

| February 14, 2018

24)
Under which conditions might diseconomies of scale result?
A)
improved coordination brought about by bureaucracy
B)
decreasing costs of inputs
C)
increasing output prices
D)
increased bureaucracy

25)
Under which conditions might diseconomies of scale result?
A)
improved coordination brought about by bureaucracy
B)
increasing price of inputs
C)
increasing output prices
D)
usage of a large amount of indivisible inputs by the firm

26)
Under which conditions might diseconomies of scale result?
A)
hampered coordination brought about by bureaucracy
B)
decreasing costs of inputs
C)
increasing output prices
D)
usage of a large amount of indivisible inputs by the firm

27)
Coordination problems in large firms might lead to
A)
horizontal marginal cost curves.
B)
downward-sloping marginal cost curves.
C)
upward-sloping short-run average cost curves.
D)
upward-sloping long-run average cost curves.

28)
Higher input prices in large firms might lead to
A)
horizontal marginal cost curves.
B)
downward-sloping marginal cost curves.
C)
downward-sloping long-run average cost curves.
D)
upward-sloping long-run average cost curves.

29)
Suppose that in 2012 MBI Corp. produced 100 million units of a good at an
average cost of $6, and in 2013 MBI Corp. expanded its plant capacity and
produced 200 million units at an average cost of $6.20. In this range, one can
conclude that MBI Corp. is experiencing
A)
economies of scale.
B)
diseconomies of scale.
C)
neither economies of scale or diseconomies of scale.
D)
increasing marginal product.

30)
Under which conditions might diseconomies of scale result?
A)
hampered coordination brought about by bureaucracy
B)
increasing costs of inputs
C)
the firm uses a large amount of indivisible inputs
D)
both A and B

31)
Suppose that Gigantic Company is increasing in size. As Gigantic Company grows,
coordination of work teams is becoming more difficult because of increased
bureaucracy. It is likely that continued growth will result in
A)
economies of scale.
B)
Gigantic Company achieving the minimum efficient scale of production.
C)
diseconomies of scale.
D)
increasing marginal returns.

32)
Suppose that Gigantic Company is increasing in size. As Gigantic Company grows,
demand for inputs causes input prices to rise. It is likely that continued
growth will result in
A)
economies of scale.
B)
reduced fixed costs.
C)
diseconomies of scale.
D)
increasing marginal returns.

33)
A firm doubled all its inputs and experienced a 50% increase in output. If all
input prices remain unchanged, the firm’s long-run average cost exhibits
A)
economies of scale at the current output level.
B)
diseconomies of scale at the current output level.
C)
a constant long-run average cost at the current output level.
D)
diminishing marginal returns at the current output level.

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