1. Which of these statements about production scale effects is false?
a. The LRATC curve is made up of the separate SRATC curve of plants of various sizes.
b. Diseconomies of scale can occur as production facilities grow larger.
c. Economies of scale result from increased reporting and regulatory requirements.
d. The consideration of economies of scale is a long-run, or strategic planning, issue.
2. Suppose the demand curve for a business firm is downward sloping. Which statement is true about elasticity (ED), marginal revenue (MR), and/or total revenue (TR)?
a. In the elastic range of the demand curve, MR > 0 when selling price is reduced.
b. TR is constant along the length of the demand curve.
c. MR = selling price when the demand curve is downward sloping.
d. ED < 1 during the elastic range of the demand curve.