Economies of scale exist when O the cost of finding a trading partner is low the firm is too large and too diversified O the firm is too small and too specialized O the long-run average cost decreases as the output increases. O a firm's decision to hire additional inputs does not result in an increase in the price of inputs

Economies of scale exist when O the cost of finding a trading partner is low the firm is too large and too diversified O the firm is too small and too specialized O the long-run average cost decreases as the output increases. O a firm's decision to hire additional inputs does not result in an increase in the price of inputs

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 1DQ

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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?
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?
You learn that a firm's average total costs (ATC) and average variable costs (AVC) are exactly equal. What does that mean? O Marginal cost is zero O ATC and AVC must be equal to zero O Average fixed costs (AFC) are zero O Economic profit is positive O Economic profit is negative
please answer both of the questions thank you! =)
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When output is zero, total fixed cost is zero. O True O False
Refer to the to graph on the night Which level of output in the graph below represents the minimum efficent scale? OA 1,000 books B. 20.000 books C. 40,000 books $22.00 20.00 18.00 D. 80,000 boks Which sire bookstore is more likely to expenence diseconomies of scale? Long -nun Average cost OA Abookstore seling 1,000 books per month B. Abookstore seling 20,000 books per month OC. Abookstore selling 40,000 books per month 1,.000 20.000 Quantity of books sold per month OD. A bookstore selling 80.000 books per month 40,00,000
The short run is a time period such that the existing firms in the market do not have sufficient time to change the amounts of any of the inputs that they employ. O the existing firms in the market do not have sufficient time to either increase or decrease their current rate of output. the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory. new firms may build plants and enter the industry.
When firms in a competitive market are experiencing zero economic profits, one can assume that O they should be producing a different product. s there is currently no better way to use society's scarce resources. O they will eventually go bankrupt. O accounting losses are being experienced by these firms.
As the quantity produced increases, then variable cost always decreases b. average fixed cost decreases O c. fixed cost increases d. none of the above O O
If a firm quadruples(4x) in size and output triples (3x), what is the returns to scale? O A Increasing returns to scale O B O с O D Constant returns to scale Decreasing returns to scale Cannot determine