1. Economies of scale exist over the range of output to units. Does the firm experience diseconomies of scale? If so, over what range of output? 2. a. Over what range of output does it experience constant long-run costs? Calculate the following costs: b. At 2,250 units of output, long-run average cost is $ ________, long-run marginal cost is $________, and long-run total cost is $________. c. At 2,400 units of output, long-run average cost is $________, long-run marginal cost is $________, and long-run total cost is $________. 3. the minimum efficient scale (MES) is ________units. In order to maximize profit, must the firm operate at MES?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 1.2CE: Plot the logarithm of arrivals for each transportation mode against time, all on the same graph....
Question

3

1. Economies of scale exist over the range of output to units. Does the firm experience diseconomies of scale? If so, over what range of output?

2. a. Over what range of output does it experience constant long-run costs?

Calculate the following costs:

b. At 2,250 units of output, long-run average cost is $ ________, long-run marginal cost is $________, and long-run total cost is $________.

c. At 2,400 units of output, long-run average cost is $________, long-run marginal cost is $________, and long-run total cost is $________.

3. the minimum efficient scale (MES) is ________units. In order to maximize profit, must the firm operate at MES?

160
120
Capital (K)
5
80
60
40
0
200
400 I
450
Q = 500
600
I
750
Labor (L)
800
Q = 1,500
Q = 1,000
1,000
Q = 2,500
-Q=2,000
1,200
1,375
Transcribed Image Text:160 120 Capital (K) 5 80 60 40 0 200 400 I 450 Q = 500 600 I 750 Labor (L) 800 Q = 1,500 Q = 1,000 1,000 Q = 2,500 -Q=2,000 1,200 1,375
Q
500
L
1500
K
200 40
750
1,000 300 60 30000
450
41,250
2,000 600 100
55,000
2,500
LTC
75
20000
125 68750
LAC
40
30
27.5
27.5
27.5
LMC
40
20
22.5
27.5
27.5
Transcribed Image Text:Q 500 L 1500 K 200 40 750 1,000 300 60 30000 450 41,250 2,000 600 100 55,000 2,500 LTC 75 20000 125 68750 LAC 40 30 27.5 27.5 27.5 LMC 40 20 22.5 27.5 27.5
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