A U - shaped long-run average cost curve is based on the assumptions that A. Economies of scale prevails at small levels of output B. Diseconomies of scale prevails at larger levels of output C. Benefits of the division of labour and specialisation accrue more at the lower scale of production D. Managerial inefficiencies are prone to a higher scale of operations Choose the correct answer from the options given below:
A, B, C and D
As a firm expands from a small scale, specialization and division of labor can reduce average cost: A and C explain economies of scale. At a sufficiently large scale, coordination and managerial difficulties can raise average cost: B and D explain diseconomies. Together they produce the conventional U-shaped LRAC curve.
Important Questions from Theory of cost - Teaching
Which of the following are the methods of determining cost behaviour?
a) High and low point method
b) Least square regression method
c) Accounting or analytical approach
d) Non - parametric method
Choose the correct answer from the options given below
Given the total revenue function, TR = 1400Q − 6Q 2 and the total cost function, TC = 1500 + 80 Q at Q = 100 units (where Q is the amount of output), which one of the following is correct?
A. MR > MC
B. MC = 80
C. MR < MC
D. MR = MC
As output expands, LAC curve falls. This is due to:
Given \(TC=Q^3-10Q^2+60Q\) for \(Q>0\), what is the minimum average cost and at what output does this minimum average cost occur?
