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4. Explain why a firm's optimal short-run supply decision is to produce zero when p

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

4. Explain why a firm's optimal short-run supply decision is to produce zero when p<minSAVC.
LK
5. Prove that the technology f(L,K) =
exhibits increasing returns to scale.
4
6. Define the following terms:
a. conditional factor demand function
b. isoquant
c. total cost function
7. Explain what is meant by the following statement:
"The long-run average cost curve is the lower envelope of the short-run average cost curves."
8. Given the following short-run total cost curve, derive the expression for the short-run average
variable cost curve:
STC(q)=16+8q+q²

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Step 1: Define average variable cost(AVC)

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