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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The profit (in dollars) from the sale of x lawn mowers is II(x) = 70 x -0.07 x2 - 750. The correct interpretation of the marginal average profit of producing 40 mowers is Select one: O a. Can not tell. O b.At production level of 40 mowers a unit increase in production will increase the total profit by $0.40 per mower. O c. At production level of 40 mowers the average profit is increasing at a rate of $0.40 per mower. O d. At production level of 40 mowers the average profit is $0.40 per mower.
Let's assume that a firm produces 60 products. Its total weekly cost (TC) at this output is $2,100. This includes TVC and TFC. We also know that the firm employs 3 part- time workers at a wage cost of $600 per worker per week. This is the firm's only variable cost (TVC). What is the firm's average fixed cost (AFC) at this output? O $2.50. O $2. O $5. O $100. O $10. Let's assume that a firm's total weekly costs are as follows: 1. Salaries of hired workers $5,000. 2. Supplies = $1,000. 3. Rent = $600, 4. The owners have invested a certain amount of their own money into the business. This could have earned them interest of $200 per week if they had chosen to put it into a bank instead of investing it into their business. 5. The value of the owner's time is estimated to be $800 per week. What are the firm's total economic costs? O $6.000 O $7.600. O $900. $7.500. O $6.700.
Consider the three figures below, depicting possible cost functions for a firm. The horizontal axis measures output in all figures, while the vertical axis measures dollars. A B Which of the following statements are correct? Choose one or more: ⒸA. Figure A could represent the average total cost. OB. Figure B could represent the average total cost. C. Figure C could represent the average total cost. OD. If Figure B represents the average variable cost, then Figure C could not represent the average total cost. OE. If Figure B represents the marginal cost, then Figure C cannot represent the average total cost.
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.
A firm has a fixed production cost of $1,000 and a constant marginal cost of production of $700 per unit produced. What is the firm's total cost function? O A. TC = 1,000 + (700q) O B. TC = 1,000 + (700q). OC. TC = 700q. O D. TC = 1,000. The firm's average total cost (ATC) of production is O A. ATC = 1,000 + (700q). OB. 1,000 + (700q) ATC = Oc. 1,000 ATC = O D. ATC = 700q. O E. ATC = 700. If the firm wanted to minimize the average total cost, would it choose to be very large or very small? Explain. OA. very small because the average total cost of production rises with output. O B.- very large because the average variable cost of production falls with output. OC. very small because the average fixed cost of production rises with output. O D. very small because the total cost of production rises with output. O E. very large because the average total cost of production falls with output.
A company has the following production function for its product, f(k, I) = k"/2/1/2. It faces input prices v = 5 for capital and w = 20 for labor. How much does the firm use of each input if it wants to produce 10 units of its product? O a. I= 4, k = 25 O b. / = 5, k = 20 O c. 1= 20, k = 5 O d. 1= 25, k = 4 Clear my choice Suppose the market demand for a good is Qº = 2000 – 8p and market supply is QS = 5p + 700. There are 10 %3D firms with exactly the same cost function. How much does each firm produce? O a. 100 O b. 120 O c. 140 O d. 200 Clear my choice
K Suppose that a firm's production function is q=5x in the short run, where there are fixed costs of $1,000, and x is the variable input whose cost is $625 per unit. What is the total cost of producing a level of output q? In other words, identify the total cost function C(q). The total cost of producing ya level of output q is A. C(q)= 1,000. OB. OC. OD. OE C(q)= 1,000+ C(q)= 1,000+ C(q) = 1,000+ 625q² C(q)= 25 q² 25 625q² 25 0.5 q B Dollars per unit of output 2000- 1800- 1600- 1400- 1200- 1000- 800- 600 400- 200- a 12 14 10 Quantity nchack 18 (1) Incorrect
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.