What is the minimum efficient scale (MES) of production?
a) The point on an average cost curve where the cost per unit begins to decline more
rapidly
b) The minimum point on a U-shaped average cost curve
c) The minimum level of production at a plant for it to be considered profitable
d) The level of production for a small sized plant
e) The threshold at which capacity is constraining for a firm’s production
What kind of economies come from reductions in cost due to adoption of technology that
has high fixed costs, but lower variable costs?
a) Short-run economies of scale
b) Short-run economies of scope
c) Long-run economies of scale
d) Long-run economies of scope
e) Partially automated economies
Which of the following is a characteristic of economies of scale?
a) The average cost declines as output increases
b) The average cost increases as output increases
c) The average cost remains constant as output increases
d) The average costs are cheaper when a firm produces a wider variety of goods
e) The average cost curve takes the form of a U-shape
Which of the following best describes economies of scope?
a) The average cost declines as output increases
b) The average cost increases as output increases
c) The average cost remains constant as output increases
d) Savings are achieved when a firm produces a wider variety of goods
e) Savings are achieved when a firm produces a decreased variety of goods
Which of the following is not a product specific fixed cost?
a) The cost to manufacture a special die to make an aircraft fuselage
b) The cost of developing graphics software to facilitate video game development
