part E Answer each of the following as true or false and briefly explainyour answer.93981a)If ec> 1, increasing returns to scale and decreasing averagecosts are indicated1b)717▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬Average cost exceeds marginal cost at the minimum efficientscale of plant.001c) DAWhen total fixed cost and price are held constant, a reduction inaverage variable cost will typically cause a reduction in thebreakeven activity level.10X00X0 0,0 0,0 0When long-run average cost is decreasing, it can pay to operatesmaller plants at their peak efficiency rather than larger plantswith some excess capacity.

Average cost, often known as unit cost, in economics is calculated by dividing the total cost (TC)…

Answered: When long-run average cost is…

When long-run average cost is decreasing, it can pay to operat smaller plants at their peak efficiency rather than larger plants with some excess capacity.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 7PA

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Question

part E

Answer each of the following as true or false and briefly explain
your answer.
9
39
8
1a)
If ec> 1, increasing returns to scale and decreasing average
costs are indicated
1b)
7
17
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
Average cost exceeds marginal cost at the minimum efficient
scale of plant.
0
0
1c) DA
When total fixed cost and price are held constant, a reduction in
average variable cost will typically cause a reduction in the
breakeven activity level.
10X00X0 0,0 0,0 0
When long-run average cost is decreasing, it can pay to operate
smaller plants at their peak efficiency rather than larger plants
with some excess capacity.

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