Fill in the blank: 1. If long-run average costs fall with output, you have increasing returns...
Fill in the blank:
1. If long-run average costs fall with output, you have increasing returns to scale or ______ of scale.
2. The law of diminishing ________ returns states that as you try to expand output, your marginal productivity (the extra output associated with extra inputs) eventually declines.
3. A ________firm cannot affect price, so there is little a competitive firm can do except react to industry price.
I think the answers are economies, marginal, and competitive, but I just want to make sure.
Homework Answers
1. Economies of scale, when cost per unit falls with increase in output.
2. Law of diminishing marginal returns. This law states that adding one variable factor of production, like labor, results in smaller increase in output.
3. A perfectly competitive firm is a price taker.
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Fill in the blank:
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