(Solved): 1) Minimum efficient scale is a) the lowest level of efficiency the firm can achieve. b) the highe ...

1) Minimum efficient scale is a) the lowest level of efficiency the firm can achieve. b) the highest level of output the firm can achieve. c) the lowest level of long-run average cost. d) the smallest quantity at which the long-run average cost achieves a minimum. 2) Assume that capital is measured along the vertical axis, and labor is measured along the horizontal axis. The firm has an initial isocost line called $T{C}_1$. Now suppose that the price of labor doubles, and the price of capital falls by one-half. Which statement accurately describes the movement of the isocost line from $T{C}_1$ to $T{C}_2$ ? a) The slope of the isocost line becomes flatter. b) The slope of the isocost line becomes steeper. c) The slope of the isocost line is unchanged. d) We cannot determine whether the slope becomes flatter or steeper. 3) When the production function exhibits returns to scale, the long-run average cost curve exhibits of scale. a) increasing; diseconomies. b) decreasing; economies. c) increasing; economies. d) constant; diseconomies.