Explain why some firms may suffer diseconomies of scale.

Question

44)
If the long-run average total cost curve is rising as output increases, then
the firm faces diseconomies of scale.

45)
A U-shaped long-run average cost curve implies that a firm faces only
diseconomies of scale.

Recall the Application about the manufacture of fake
killer whales used to scare sea lions off the Washington coast to answer the
following question(s).

46)
Recall the Application. The mold used to produce the fake killer whales is an
indivisible input.

47)
Can a firm experience diminishing returns in the long run?

48)
What are indivisible inputs and what are their implications for economies of
scale?

49)
Why are some long-run average cost curves steeper on the downward side than
others?

50)
Draw a graph showing the long-run average cost curve for a firm that
experiences economies of scale.

51)
Explain why some firms may suffer diseconomies of scale.

Recall the Application about the manufacture of fake
killer whales used to scare sea lions off the Washington coast to answer the
following question(s).

52)
Recall the Application. What is the indivisible input and what are its
implications for economies or diseconomies of scale?

5.4 Examples of Production Cost

1)
Since a large or a small wind turbine have similar installation, operating and maintenance
costs, but a large turbine has four times the generating capacity but costs
less than three times as much as a small turbine, the average cost of
generating electricity with wind is

A)
constant at each output.

B)
increasing as output increases.

C)
decreasing as output increases.

D)
at first decreasing and then increasing as output rises.

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