Sophia Microeconomics Unit 3 Milestone.docx - Sophia...

Sophia Microeconomics
Unit 3 Milestone
1
Which of the following is why the long run average cost curve must
lie at the same level or below any short run average cost curve?

Because in the long run, a firm will generally operate at higher per-unit cost than in the
short run

Because in the long run, all production costs are variable

Because of economies of scale

Because of the law of diminishing returns
CONCEPT
Long-Run Supply Curve
2
The additional income a company generates from selling one more
unit due to this is called which of the following?
CONCEPT
Revenue: Total, Marginal and Average
3

If the goal is to maximize profit, at which point on the graph would a
firm’s output be optimized?
Which scenario corresponds with economies of scale?


A decrease in production will cause the next unit to first increase in cost, then decrease,
then increase again.
CONCEPT
Economies, Constant and Diseconomies of Scale
5
Which of the scenarios below is an example of a monopoly?

A company produces a lemon-lime soda that is identical to others on the market in
terms of taste but has a recognizable brand because of advertising.

In this industry, it is easy to enter and exit the market.

A company engages in predatory price cutting in order to discourage any competition.