Which of the following statements is true? (a) If a firm is experiencing decreasing returns, it will face increasing opportunity costs and hence will have a convex production possibility frontier. (b) If a firm has a steep average total cost curve, then it will have fairly low fixed costs as a proportion of total costs and would incur only a low cost penalty if output declines. (c) A firm with a concave production function at all levels of output would face a convex total cost function at all levels of output. (d) If a firm faces diminishing returns, then at low levels of output, the average variable cost effect would dominate, but at higher levels of output, the average fixed cost effect would dominate.
Which of the following statements is true? (a) If a firm is experiencing decreasing returns, it will face increasing opportunity costs and hence will have a convex production possibility frontier. (b) If a firm has a steep average total cost curve, then it will have fairly low fixed costs as a proportion of total costs and would incur only a low cost penalty if output declines. (c) A firm with a concave production function at all levels of output would face a convex total cost function at all levels of output. (d) If a firm faces diminishing returns, then at low levels of output, the average variable cost effect would dominate, but at higher levels of output, the average fixed cost effect would dominate.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter9: Applications Of Cost Theory
Section: Chapter Questions
Problem 3E
Related questions
Question
Which of the following statements is true?
(a) If a firm is experiencing decreasing returns, it will face increasing
(b) If a firm has a steep
(c) A firm with a concave production function at all levels of output would face a convex total cost function at all levels of output.
(d) If a firm faces diminishing returns, then at low levels of output, the
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning