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    If the long run average cost
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    (Original post by MrMC)
    If the long run average costs of production for a firm fall as output rises, then we have

    a) Constant returns to scale
    b) Increasing returns to scale
    c) Decreasing returns to scale
    d) Increasing average fixed costs of production
    e) Lower total costs of production

    Anyone know the answer? Thanks
    Which ones would you rule out immediately and why?
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    (Original post by Holmstock)
    Which ones would you rule out immediately and why?
    A and C i think, what do you think the answer is
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    it's B
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    (Original post by PrathamM)
    it's B
    That's what i was thinking... i was confused because it sounds like economies of scale is the answer but increasing returns to scale is different
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    (Original post by MrMC)
    That's what i was thinking... i was confused because it sounds like economies of scale is the answer but increasing returns to scale is different
    With these types of question, it is helpful to think clearly about all the suggested answers. Do you think that d or e could be true? (I agree that a and c are not correct).
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    (Original post by MrMC)
    Cheers dude!

    I was also stuck on this ques if you could help

    A company producing tea can make 1kg for an average variable cost of £1.20. It must pay fixed costs per month of £2,000 and the company sells 2,500kg of tea per month. If the firm decides to add a mark-up of 20% what price should it charge per 1kg of tea?a) £3.50b) £5.50c) £4.20d) £8.80e) £2.40
    I think it's E. could be wrong.
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    (Original post by Holmstock)
    With these types of question, it is helpful to think clearly about all the suggested answers. Do you think that d or e could be true? (I agree that a and c are not correct).
    vbn
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    (Original post by MrMC)
    Cheers dude!

    I was also stuck on this ques if you could help

    A company producing tea can make 1kg for an average variable cost of £1.20. It must pay fixed costs per month of £2,000 and the company sells 2,500kg of tea per month. If the firm decides to add a mark-up of 20% what price should it charge per 1kg of tea?a) £3.50b) £5.50c) £4.20d) £8.80e) £2.40
    e?
 
 
 
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