Economies of scale imply that average total cost declines as output increases in the long- run. In this example, average total cost falls from $6 to $5 when production increases by 10,000 vases. It could have been caused by increasing marginal productivity if this were the short run, but that is not given as an option.

Depreciation expense each year for five years would be $12,000 [($80,000 - $20,000)/5].

Based on the data given, we should use the t-distribution. The critical value will be based at t_(0.10, 20), and is 1.325. Our confidence interval will then be
0.5 0.5
[-25% - 1.325*(10%)/(21 ), -25% + 1.325*(10%)/(21 )] = [-28%, -22%]

Cross-sectional data are data that describe characteristics of entities (such as persons, places, and companies) at a given moment in time. A balance sheet is just one example of cross sectional data. A census is also an example of cross-sectional data.

We need to calculate the standard normal variance, z = (30 - 15)/25 = 0.60. From the standard normal tables, Prob(z = 0.60) = 0.7257. Thus, Prob(z >= 0.60) = 1 - 0.7257 = 0.2743, or 27.4%.