Section I - Objective Questions Please put your name and answers in the appropriate cells in the attached Excel answer sheet. (Leave the formatting as is. Thanks.) 1. Which of the following is a characteristic of economies of scale?

a) The average cost declines as output increases

b) The average cost increases as output increases

c) The average cost remains constant as output increases

d) The average costs are cheaper when a firm produces a wider variety of goods

e) The average cost curve takes the form of a U-shape

2. What is the minimum efficient scale (MES) of production?

a) The point on an average cost curve where the cost per unit begins to decline more rapidly

b) The minimum point on a U-shaped average cost curve

c) The minimum level of production at a plant for it to be considered profitable

d) The level of production for a small sized plant

e) The threshold at which capacity is constraining for a firm's production.