The following graph shows the short-run average total cost curves and the long-run average total cost curve for a publishing firm. The five markedquantities indicate points of tangency between each short-run average total cost curve (ATC) and the long-run average total cost curve (LRATC); forexample, Qi marks the point of tangency between ATC1 and LRATC.The orange point on ATC, indicates the firm's current output level in the short run (Q2).ATC,ATC5ATCALRATCATC,ATC,Q,Q5OUTPUTCOST PER UNIT In the long run, if the firm decides to keep output at its initial level, what will it likely do?O Stay on ATC, but decrease to the point touching LRATCShut downO Shift to operate on ATC2O Shift to operate on ATC3True or False: The minimum efficient scale is achieved at the minimum point on each average total cost curve.FalseO True

Long-run average total cost (LRATC) is a business statistic that indicates the average cost per unit…

Answered: The following graph shows the short-run…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Let F be the fixed cost of production, let VC be the variable cost of production, C be the total cost, MC be the marginal cost, AFC, the average fixed cost, AVC, the average variable cost, and AC, the average cost. Complete the following cost table. (Enter numeric responses rounded to two decimal places.) Output (q) 12 3 4 5 6 7 8 9 10 F $100 100 100 100 100 100 100 100 100 VC $32 56 72 80 96 C MC $132 $32 156 24 172 16 8 16 24 196 220 152 252 192 292 240 340 296 40 48 56 AFC AVC AC $100.00 $32.00 $132.00 50.00 28.00 78.00 33.33 24.00 25.00 20.00 45.00 20.00 39.20 16.67 36.67 14.29 36.00 36.50 37.78 20.00 21.71 24.00 11.11 26.67 10.00 29.60
The following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average cost curve (LRAC); for example, Q1 marks the point of tangency between SRATC₁ and LRAC. The orange point on SRATC3 indicates the firm's current output level in the short run (3). COST PER UNIT SRATC₁ LRAC SRATC O Shut down SRATC3 QUANTITY OF OUTPUT O Shift to operate on SRATC₁ O Stay on SRATC3 O Shift to operate on SRATC₂ SRATC5 In the long run, if the firm decides to keep output at its initial level, what will it likely do? SRATC
A firm has fixed costs of $60 and variable costs as indicated in the accompanying table. Complete the table and check your calculations by referring to question 3 at the end of Chapter 7. Graph the AFC, ATC, and MC curves. Why does the AFC curve slope continuously downward? Why does the MC curve eventually slope upward? Why does the MC curve intersect the ATC curve at its minimum point?
6
The table below represents incomplete information on the short-run production costs for a firm, where: FC is fixed cost; TVC is total variable cost; TC is total cost; MC is marginal cost; and AFC, AVC, and ATC are average fixed, average variable, and average total cost, respectively. Based on the information provided in the table, complete the rest of the table. Note that values for FC, TVC, TC, AFC, AVC, and ATC should be placed on the same line as the corresponding quantity; values for MC should be placed between quantities. For example, the marginal cost of increasing output from 2 units to 3 units is $110, thus $110 is entered between Q=2 and Q=3 in the table. Find the quantity at which diminishing marginal returns set in. TVC TC Q 1 FC MC AFC AVC ATC 400 300 2 920 110 3 4 180 5 272
Ty grows pumpkins. When Ty leases 1 field for $60 a day and capital for $40 a day, his average total cost curve is ATC₁- When Ty leases 2 fields for $120 a day and capital for $80 a day, his average total cost curve is ATC₂2 Draw a point on Ty's average cost curve such that he will use 1 field to grow any smaller quantity and 2 fields to grow any larger quantity. Ty's long-run average cost curve is OA. the same as his ATC, curve OB. the same as his ATC₂ curve OC. made up of the segments of his ATC, and ATC₂ curves that have the higher average total cost O D. made up of the segments of his ATC, and ATC₂ curves that have the lower average total cost 2.50 2.00- 1.50 ATC, 1.00- Average total cost (dollars per pumpkin) 050- ATC₂2 Q Q 2 0.00 + 0 200 400 600 800 1000 1200 1400 Quantity (pumpkins per day) >>> Draw only the objects specified in the question.
2) Craft Corp.'s production function is given by q = 5min(K, 2L), where q is the quantity produced and K and L are the amounts of capital and labor input. Input prices are r = 2 and w 6. a) Find Craft Corp's long-run cost function. 2000. What b) Draw Craft Corp's Long isoquants and isocost and show the equilibrium when is the total cost to produce q = 2000? What is the labor cost to produce q = 2000? What is the capital cost to produce q = 2000? = c) Suppose in the short run K is fixed at 20. Find Craft Corp's short-run cost function. Represent both, the short-run and the long-run cost function in a diagram.
4. Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair) Quantity Total Cost Marginal Cost Fixed Cost Variable Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) 120 1 210 2 270 3 315 4 380 5 475 630
Provide a diagram that illustrates, for the short-run analysis, the average cost function, the marginal cost function, the average variable cost function and the variable cost function. Provide clear explanations for why these functions have common points of intersection.
Suppose the imaginary company of Panthera is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand's total cost of production at several different quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost (Pairs) (Dollars) (Dollars) о 120 1 210 2 270 3 315 4 380 5 475 6 630 (Dollars) (Dollars) Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair) On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the…
The four statements below describe properties of a firm's short run cost curves. Complete the statements using words from the list given below. • The increase in total cost from producing an additional unit of output is called • Average cost is the total cost of When a firm's average cost curve crosses the marginal cost curve, average costs are When a firm's average cost is greater than marginal cost, then producing an additional unit of output will result in a fall in average cost marginal cost at a minimum at a maximum production production divided by the quantity of units produced
will need to upload your answers. Assume a company is producing 600 units of output per day and minimizing total cost with the following isoquant graph. Both the price of labor (w) and the price of capital (r) are $100 per day. Now assume they want to increase production to 800. Use the graph and complete sentences (and the numbers from the situation provided) to explain whether marginal cost would be higher in the short run or long run or will the MC be the same in both the SR and LR. That is, what is the MC is the short run and the MC in the long run? Explain. KI

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