2. Below is the long run average total cost curve for a book producer (publisher).ATC FC=$20ATC FC=$50100ATC FC=$30175300Long Run AverageTotal CostQa. Which levels of output are there increasing returns to scale, constant returns to scale, anddecreasing returns to scale?b. What level of fixed costs should the publisher choose if they are to produce 100 books?C. What level of fixed costs, and how many books should be produced, to minimize averagecosts (cost per book)?

Let's break down the analysis of the long run average total cost (ATC) curve for a book producer…

Answered: 2. Below is the long run average total…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3CQQ

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Similar questions

How does fixed cost affect marginal cost? Why is this relationship important?
What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
What is a long-run average cost curve?
What shapes would you generally expect each of the following cost curves to have: fixed costs, variable costs, marginal costs, average total costs, and average variable costs?
Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
What is the relationship between marginal product and marginal cost? (Hint: Look at the curves.) Why do you suppose that is? Is this relationship the same in the long run as in the short run?
What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?
How do we calculate each of the following: marginal cost, average total cost, and average variable cost?

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