Sophia Microeconomics Unit 3 Milestone

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?

Price effect

Break even point

Diseconomies of scale

Output effect
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?

Point 2

Point 3

Point 4

Point 1
CONCEPT
Output Optimization: Marginal Revenue / Marginal Cost

4

Which scenario corresponds with economies of scale?

An increase in production will cause the cost of the next unit to decrease.

An increase in production will cause the cost of the next unit to increase.

A decrease in production will cause the next unit to cost the same.