4. Suppose a firm hires all production inputs in competitive resource markets. The firm
wishes to expand, and it finds that it is able to increase long-run total output by 10%, but
total production costs increase by 5%. It must be the case that:
A. the firm is experiencing constant returns to scale.
B. the firm is currently operating where the long-run average total cost curve is upward
sloping.
C. the firm experiencing diseconomies of scale.
D. the firm is currently operating at the bottom of the long-run average total cost curve.
E. the firm is experiencing economies of scale.
5. Which of the following would cause a supply curve to shift to the right?
A. Consumer tastes and preferences get stronger.
B. The price of a substitute consumer good increases.
C. Production technology improves.
D. The price of a complementary consumer good decreases.
E. The price of a production input rises.www.apstudy.net
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