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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
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