In the graph at the right, the average variable cost iscurve ☐. The average total cost is curvemarginal cost is curveTheCCost per Unit ($)Per Unit CostsA0Output QuantityB

The graph depicts three critical cost curves: Average Variable Cost, Average Total Cost, and…

Answered: In the graph at the right, the average…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 9P

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Similar questions

Would you consider an interest payment on a loan to a film an explicit or implicit cost?
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
How does fixed cost affect marginal cost? Why is this relationship important?
A firm had sales revenue of 1 million last year. It spent 600,000 on labor, 150,000 on capital and 200,000 on materials. What was the firms accounting profit?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
What is the difference between a fixed input and a variable input?
What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
What shapes would you generally expect each of the following cost curves to have: fixed costs, variable costs, marginal costs, average total costs, and average variable costs?
Compute the average total cost, average variable cost, and marginal cost of producing 50 and 72 haircuts. Draw the graph of line three curves between 60 and 72 haircuts.
What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?
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?

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In the graph at the right, the average variable cost is curve ☐. The average total cost is curve marginal cost is curve The C Cost per Unit ($) Per Unit Costs A 0 Output Quantity B