A business whose only inputs are labour and capital expands its employment level in the long run from 12 to 18 workers and its capital from 4 to 6 machines. Write out dollars and cents, e.g. $1.00 or $0.10 for any monetary amounts entered as a solution below. Assuming that the daily wage of $100 and the daily upkeep (including wear and tear) per machine of $20 remain constant in the long run, Identify the relevant returns to scale and the change in long-run average cost if dally output were to expand in each of the following possible ways. a. If dally output expands from 140 to 280 units then in this output range the business is experiencing increasing while long-run average cost is falling At 140 units long-run average cost is $[ and at 280 units it is b. If daily output expands from while long-run average cost is 140 to 210 units then in this output range the business is experiencing constant staying the same At 140 units long-run average cost is $ ✓returns to scale c. If daily output expands from 140 to 186 units while long-run average cost is rising ✓returns to scale and at 210 units it is $ then in this output range the business is experiencing decreasing ]. At 140 units long-run average cost is $[ and at 186 units it is returns to scale
A business whose only inputs are labour and capital expands its employment level in the long run from 12 to 18 workers and its capital from 4 to 6 machines. Write out dollars and cents, e.g. $1.00 or $0.10 for any monetary amounts entered as a solution below. Assuming that the daily wage of $100 and the daily upkeep (including wear and tear) per machine of $20 remain constant in the long run, Identify the relevant returns to scale and the change in long-run average cost if dally output were to expand in each of the following possible ways. a. If dally output expands from 140 to 280 units then in this output range the business is experiencing increasing while long-run average cost is falling At 140 units long-run average cost is $[ and at 280 units it is b. If daily output expands from while long-run average cost is 140 to 210 units then in this output range the business is experiencing constant staying the same At 140 units long-run average cost is $ ✓returns to scale c. If daily output expands from 140 to 186 units while long-run average cost is rising ✓returns to scale and at 210 units it is $ then in this output range the business is experiencing decreasing ]. At 140 units long-run average cost is $[ and at 186 units it is returns to scale
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A business whose only inputs are labour and capital expands its employment level in the long run from 12 to 18 workers and its capital
from 4 to 6 machines. Write out dollars and cents, e.g. $1.00 or $0.10 for any monetary amounts entered as a solution below.
Assuming that the daily wage of $100 and the daily upkeep (including wear and tear) per machine of $20 remain constant in the long
run, identify the relevant returns to scale and the change in long-run average cost if dally output were to expand in each of the
following possible ways.
a. If daily output expands from 140 to 280 units then in this output range the business is experiencing increasing
while long-run average cost is falling
At 140 units long-run average cost is $
and at 280 units it is $
b. If daily output expands from
while long-run average cost is
140 to 210 units then in this output range the business is experiencing constant
staying the same. At 140 units long-run average cost is $[
returns to scale
✓returns to scale
and at 210 units It is $
c. If dally output expands from 140 to 186 units then in this output range the business is experiencing decreasing ✓returns to scale
while long-run average cost is rising
At 140 units long-run average cost is $ and at 186 units it is $
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