1. Relation of A and T curves *3* As the level of production increases in the short-run, the Average Variable Cost (AVC) curve (increases continuously/first decreases and then increases/decreases continuously) and the Average Fixed Cost (AFC) curve (increases continuously/first decreases and then increases/decreases continuously). O Increases continuously; decreases continuously. O First decreases and then increases; decreases continuously. First decreases and then increases; increases continuously. Decreases continuously; decreases continuously. O Increases continuously; first decreases and then increases. Save & Continue Continue without saving

1. Relation of A and T curves 3 As the level of production increases in the short-run, the Average Variable Cost (AVC) curve (increases continuously/first decreases and then increases/decreases continuously) and the Average Fixed Cost (AFC) curve (increases continuously/first decreases and then increases/decreases continuously). O Increases continuously; decreases continuously. O First decreases and then increases; decreases continuously. First decreases and then increases; increases continuously. Decreases continuously; decreases continuously. O Increases continuously; first decreases and then increases. Save & Continue Continue without saving

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Suppose you're a manager at a plant producing Aston Martin cars. You estimate that your production function is q = 0.1L2K³ where q is the quantity produced, L is labor, and K is capital. Suppose in the short-run, capital is fixed at 3 units. a. What is the short-run production function? b. In the long-run, does this production function have constant returns to scale, increasing returns to scale, or decreasing returns to scale? . You take a part time job at a grocery store. Using your knowledge of economics, you estimate that the demand for milk is inelastic. If you decide you want to increase your total revenue, should you lower the price of milk or increase the price of milk?
Give typing answer with explanation and conclusion
6. If a firm's ATC is falling in the long run, then a. it is subject to economies of scale over that range of output b. it is subject to diseconomies of scale over that range of output c. it is subject to constant return to scale over that range of output d. it has reached the minimum efficient scale of production e. both it is subject to constant return to scale over that range of output and it has reached the minimum efficient scale of production are true
4. The shape of a firm's long-run average cost curve depends o how costs vary with scale of operation. Draw a long-run average cost curve for a firm that exhibits economies of scale, constant returns to scale, and diseconomies of scale. Identify each of these sections of the cost curve and explain why each section exemplifies its specific type of return to scale.
An example of constant returns to scale is when capital and labor inputs: A. both increase 5 percent and output increases 10 percent. OB. do not change and output decreases 5 percent. OC. both increase 10 percent and output increases 5 percent. D. both increase 10 percent and output increases 10 percent.
We classify Three Possible Long-Run Average Cost Curves for a Multiplant Firm; given the following three cost curves/ quantity …classify the type of those long run average cost
a) Explain The Law of Diminishing Returns. b) Distinguish between the terms short run and long run in a production scenario. A BI mary here to search !!!
1. Relation of A and T curves *3 As the level of production increases in the short-run, the Average Variable Cost (AVC) curve (increases continuously/first decreases and then increases/decreases continuously) and the Average Fixed Cost (AFC) curve (increases continuously/first decreases and then increases/decreases continuously). Increases continuously; decreases continuously. First decreases and then increases; decreases continuously. First decreases and then increases; increases continuously. Decreases continuously; decreases continuously. Increases continuously; first decreases and then increases.
6. The production function at Weedy's Grainery is Q=L¹/4K¹/2. If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.
12. Discuss the connection between returns to scale and diminishing marginal product. Provide graphs to illustrate their relationship.?
Economies of Scale or Increasing Returns Scale exist if which of the following is true? Pick all that apply. i Multiple answers: Multiple answers are accepted for this question Select one or more answers and submit. For keyboard navigation... SHOW MORE a A doubling of all inputs leads to less than double the amount of output b A doubling of all inputs leads to more than double the amount of output. C Average Costs decline as output increases. d Average Costs rise as output increases.
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