**Understanding Scale in Production**A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects:- ○ economies of scale.- ○ diseconomies of scale.- ● constant returns to scale.- ○ diminishing returns.In economic terms, the concept of "economies of scale" is highlighted when a larger production facility can produce goods at a lower cost per unit than smaller facilities. This is typically due to factors such as increased efficiency, better utilization of resources, and spreading fixed costs over more units. The correct option in this context is "economies of scale," although the image incorrectly highlights "constant returns to scale." Understanding these concepts is critical for studying how businesses can grow efficiently and reduce production costs in the long term.

A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects O economies of scale. O diseconomies of scale. constant returns to scale. O diminishing returns.

A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects O economies of scale. O diseconomies of scale. constant returns to scale. O diminishing returns.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider the case of three inputs to produce a product. The function is given as f(aX 25, aX.5, aX…

A: Constant returns to scale: After input is increased by any proportion, the output also increases by…

Q: A firm encountering economies of scale over some ange of output will have a: rising long-run average…

A: The economies and diseconomies of scale affect the shape of average cost curve.

Q: Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only…

A: Given: To Find: The short-run total cost if Ike's Bikes is currently producing 600 bikes: The…

Q: There is a different short-run ATC curve for each level of * variable cost. variable inputs. fixed…

A: The ordinary shape for a short-run normal expense curve is U-molded with diminishing normal expenses…

Q: For a firm, constant returns to scale occur when the for the firm AFC ATC MC as the quantity…

A: ATC, or average total cost, is a term used in economics and business. It's a statistic used to…

Q: Which describes our situation when quantity increases from 2 to 3 Economies of Scale ODiseconomies…

A: Quantity Long run T.C $ L.R A.T.C $ 0 8 -- 1 28 28 2 47 23.5 3 67 22.33 4 96 24 5 138…

Q: If a store owner increases the size of his store producing more quantities of his product, and…

Q: Consider the long-run average cost curve to the right. Using the point drawing tool, plot a point…

A: Answer: Introduction: Economies of scale: economies of scale occur when the average cost of…

Q: Cost £ AC Quantity per week Q Figure 3 Short run average cost curve for a firm Figure 3 shows the…

A: Cost refers to the value of all the inputs that are used up in the production of a good or in the…

Q: Which of the following can wę conclude when production has diseconomies of scale? Average fixed cost…

A: please find the answer below.

Q: The long run is best defined as a time period O during which at least one input cannot be changed. O…

A: Some factors of production vary with the output produced in the short run, while some remains…

Q: What is miimum effcient scae Mirimum efcient scale is OA e level of output at which a fim begins to…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: If a firm's average total costs decrease as it increases its scale of production, the firm is…

A: Economies of scale is when the increasing production decreases the average total cost. Diseconomies…

Q: Economies of scale mean that a firm will O try to spread production over many plants. be able to…

A: A firm in a market can produce goods and services at the lowest average cost and increase the…

Q: I’m trying to practice how to derive Lorn run and short run cost functions could I have explanations…

A: Production function : Q=L1/2K1/2 Marginal Product of Labor=MPL=dQ/dL=1/2L-1/2K1/2 Marginal Product…

Q: in the long run, firms generally experience diseconomies of scale, first because the large initial…

A: Economies of scale is a situation of cost advantage that a firm experiences as their long-run…

Q: 0. If all inputs are trebled and the resultant output is doubled, this is a case of

A: Returns to scale refers to the extent of change in output level when all the inputs are raised by…

Q: 800 Is 720 640 SRATC, 560 480 SRATC, 400 320 SRATC, 240 160 LRATC 80 100 200 300 400 500 600 700…

Q: If a firm increases all of its inputs by 8 percent and its output increases by 8 percent, then…

A: Returns to scale gives the proportionality of change in output when there is change in the amount of…

Q: Q1. We classify Three Possible Long-Run Average Cost Curves for a Multiplant Firm; given the…

A: Here, given three graphs shows the difference nature of the long-run average cost curve of a firm.

Q: O Fixed cost. Variable cost. Total cost. is falling when marginal cost is below it and rising when…

A: Cost curves are crucial tools for understanding and analyzing the cost framework for a firm's output…

Q: If the total output produced by the firm is 10 units. The average total cost is $30 and the average…

A: Total output10 unitsAverage total cost$30Average fixed cost$10Total variable cost$30We need to find…

Q: Assume that Peter's short run Total Cost Curve is TC = 20,000q- 200q² +q*. Calculate his (short run)…

A: Average total cost is total cost divided by quantity. ATC = TC / q => ATC = (20,000q - 200q2 +…

Q: Assume a firm has the long run total cost presented in the table below. Output TC $8 $14 $18 4. $20…

A: The total cost of production is defined as the amount in monetary terms a firm incurs when it…

Q: If a firm quadruples (4x) in size and output increases sixfold (6x), what is the returns to scale?…

A: Returns to scale are the quantitative changes in output induced by a proportionate increase in all…

Q: The following question is referred to the following table Q28: Table Q28: Output, Fixed and Variable…

A: (By and large) fewer information costs. Outside economies of scale can likewise be acknowledged by…

Q: If a firm triples inputs and produces twice the output, then there are constant returns to scale.…

A: Return to scale is a long-run concept that states the proportional change in output due to a…

Q: The slope of an average cost curve exhibiting diseconomies of scale is -- Infinite O Zero O Negative…

A: In a market, diseconomies of scale refer to the situation when a firm faces an increase in the…

Q: shows the long-run average costs for Inmode, a manufacturer of Internet modems. Quantity per Day…

A: This can be defined as a cost that shows the type of cost that an individual, business, or any other…

Q: LRATC minimum ATC A between points A and B. B to the left of point A. to the right of point B. at…

A: Diseconomies of Scale : Diseconomies of scale can be defined as that situation when as output…

Q: 50. If all inputs are trebled and the resultant output is doubled, this is а case of A. O Constant…

A: Returns to scale is a long-term concept which tells the response of output when the number of inputs…

Q: The N.M. Corporation has exactly the same costs of production as last year except for fixed costs,…

A: Cost can be defined as a concept that shows the amount of expenditure and any other sacrifice such…

Q: Cost LRAC B A Quantity Figure 1 Long run average cost curve for a firm Figure 1 shows a long run…

A: In economics, when the firm expands or grows then there exists a change in its cost too. When the…

Q: d. Using the table below indicate which firm has (i) diseconomies of scale and (ii) constant returns…

A: Diseconomies of scale is occurs when the per unit cost of output increases as output level increases…

Q: QUESTION 19 Assume short-run production. Select the statements that are true. O The marginal cost at…

A: Marginal cost is the exchange in total production cost that comes from making or producing one extra…

Q: If average total costs increase when the output level increases, then there are diseconomies of…

A: The expenses that are being incurred for running a business and carrying out its various…

Q: Diseconomies of scale exist over the range of output for which the long-run average cost curve is a.…

A: The firms are considered to be the producers who work with the motive of earning maximum possible…

Q: Consider the following information on long run total costs: Output 1 2 3 4 5 6. 7 Total Costs 50 90…

A: Output Total Cost Marginal Cost ATC 0 0 0 0 1 50 50 50 2 90 40 45 3 123 33 41 4 160 37 40…

Q: In the figure, the intersection of curves A and B is the point at which 20 16 20 40 60 80 Quantily…

Q: Which of the following best explains why adding more of a variable input will eventually lead to…

A: The production of output depends on different inputs. In the short run, some inputs are kept fixed…

Q: If the long-run ATC decreases as the quantity of output increases, the firm is necessarily…

A: Long-run average total cost (LRATC) represents the average cost per unit of output over the long…

Concept explainers

Cost of Production

The entire idea of the cost of production or production cost is applied corresponding, or we can say that it is related to monetary cost. Money cost refers to any money expenditure which the firm or supplier, or producer undertakes in purchasing or hiring factor of production or factor services.

Question

**Understanding Scale in Production**

A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects:

- ○ economies of scale.
- ○ diseconomies of scale.
- ● constant returns to scale.
- ○ diminishing returns.

In economic terms, the concept of "economies of scale" is highlighted when a larger production facility can produce goods at a lower cost per unit than smaller facilities. This is typically due to factors such as increased efficiency, better utilization of resources, and spreading fixed costs over more units. The correct option in this context is "economies of scale," although the image incorrectly highlights "constant returns to scale." Understanding these concepts is critical for studying how businesses can grow efficiently and reduce production costs in the long term.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define economies of scale

VIEW

Step 2: Explain the correct option

VIEW

Step 3: Explain the incorrect options

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Need assistance with choosing the correct answer
Using diagram, explain returns to scale and their influence on a firm's long-run average cost (LRAC). CS Scanned with CamScanner
When fixed costs are ignored because they are irrelevant to a business's production decision, they are called O explicit costs. O implicit costs. Osunk costs. O opportunity costs.
es The following are three short-run average total cost schedules for the only three possible plant sizes, 1, 2, and 3. Find the long-run average cost schedule and show the result in the second table. Size 1 Q 10 20 30 40 50 60 ATC $1.00 90 .85 .88 .93 1.05 Size 2 Q 20 30 40 50 60 70 Long-Run Q 10 90 ATC $.95 .80 .76 .79 .83 .90 Size 3 Q 40 50 60 70 80 90 AC $ ATC $1.00 .87 .84 .80 .95 1.05
In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits a. diseconomies of scale. b. efficient scale. c. economies of scale. d. constant returns to scale.
Suppose a firm is producing in the long run. When it produces 2,000 units of output, its total cost is $6,000. When it produces 2,200 units of output, its total cost is $6,200, and when it produces 2,400 units of output, its total cost is $7,000. This firm is experiencing. returns to scale. Odecreasing constant Oincreasing then decreasing. O decreasing then increasing Oincreasing
If a firm decides to produce no output in the short term, which of the following costs will be zero: O Variable cost O Total cost Fixed cost O Capital Cost
15. If the long-run average total cost is increasing as the output increases we call this: a. economies of scale b. diseconomies of scale c. constant returns to scale d. specialization
shows the long-run average costs for Inmode, a manufacturer of Internet modems. Quantity per Day Average Cost ($) a) At what output is minimum efficient scale achieved? Output: b) with what output do diseconomies of scale begin? Output: 1 95 2 85 3 75 4 70 5 65 6 65 7 75 8 100
Let's assume that in Ventura, a toaster company was manufacturing 3,000 units of toasters at the total cost of $141,000. Currently, it is manufacturing 5,000 units and the total cost is $200,000. This toaster company is experiencing Group of answer choices economies of scale none of the other answers diseconomies of scale constant returns to scale
Question 39 If a store owner increases the size of his store producing more quantities of his product, and experiences constant returns to scale as a result, his long-run average total cost curve should be O increasing O decreasing O vertical O horizontal
If a firm experiences economies of scale over all relevantlevels of output, its long-run average total cost curve will: O slope downward O slope upward. be vertical O be horizontal.