Answer:
b. constant returns to scale because average total cost is constant as output rises.
Explanation:
The question has options. Below is the complete question.
<u>Complete Question</u>
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits
a. diseconomies of scale because total cost is rising as output rises.
b. constant returns to scale because average total cost is constant as output rises.
c. diseconomies of scale because average total cost is rising as output rises.
d. economies of scale because average total cost is falling as output rises.
The correct answer is explained below.
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits constant returns to scale because average total cost is constant as output rises.
What fact or facts support a situation where trade is advantageous?
B. II only
Answer:
A. a monopoly faces a downward sloping demand curve.
Explanation:
In business, it is seen to occur because they have no competition, monopolists have no incentive to improve their products. A lot of their focus is instead placed on maintaining monopolistic conditions through bribing their way and other tactics that dissuade competitors from entering the market.
Demand curve slopes downward, this is said to decreases with each unit of production beyond the profit maximizing quantity and in the eyes of the monopolist, cash is lost with each additional unit been produced, causing marginal cost exceeds marginal revenue. This causes the restricted output and higher costs that characterize products produced by monopolists.
Because the demand curve slopes downward, marginal revenue decreases with each unit of production beyond the profit maximizing quantity. Thus, the monopolist loses money with each additional unit produced, as marginal cost exceeds marginal revenue.
