Question Details

Economies of Scope refers to situations where per unit costs are 



1.	Which of the following statements concerning the long-run average cost curve of economic theory is true?
A.	It is L-shaped
B.	It is -shaped
C.	It is -shaped
D.	It is -shaped
E.	It is M-shaped

2.	Economies of scale exist whenever long-run average costs:
A.	Increase as output is increased
B.	Remain constant as output is increased
C.	Decrease as output is increased
D.	Decline and then rise as output is increased
E.	None of the above

3.   Economies of Scope refers to situations where per unit costs are:
A.	Unaffected when two or more products are produced
B.	Reduced when two or more products are produced
C.	Increased when two or more products are produced
D.	Demonstrating constant returns to scale
E.	Demonstrating decreasing returns to scale

4.	The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
A.	transportation costs
B.	imperfections in the labor market
C.	imperfections in the capital markets
D.	problems of coordination and control encountered by management
E.	All of the above

5.	The flat-screen plasma TVs are selling extremely well.  The originators of this technology are earning higher profits.  What theory of profit best reflects the performance of the plasma screen makers?
A.	risk-bearing theory of profit
B.	dynamic equilibrium theory of profit
C.	innovation theory of profit  
D.	managerial efficiency theory of profit
E.	stochastic optimization theory of profit

6.	 To reduce Agency Problems, executive compensation should be designed to:
a.	create incentives so that managers act like owners of the firm.
b.	avoid making the executives own shares in the company.
c.	be an increasing function of the firm's expenses.
d.	be an increasing function of the sales revenue received by the firm.
e.	all of the above



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