The following graphs depict the costs and expenses in the short run and the long run for Edison's Pizza Place. Edison must pay $190 per month to rentpizza ovens (including sales tax) and $21 per hour for his workers. He also pays an additional $1,800 a month for a license that allows him to sell beerat his pizza parlour.DOLLARSMCShort RunACShort-Run CurveMarginal costAverage costAverage expendituresOUTPUT?DOLLARSFill in the following table with information on how each curve is affected, if at all.Long-Run CurveMarginal costAverage variable costAverage costEffectMCLong RunNow, suppose the sales tax on oven rentals is increased, so the monthly price of ovens increases to $225 per month...ACAVCOUTPUTEffect

Rental rate of Oven=190 per month Labor charge =21 per hour License charge=1800 per month New rent…

The following graphs depict the costs and expenses in the short run and the long run for Edison's Pizza Place. Ed pizza ovens (including sales tax) and $21 per hour for his workers. He also pays an additional $1,800 a month fo at his pizza parlour. DOLLARS Short Run ( MC AC OUTPUT DOLLARS Fill in the following table with information on how each curve is affected, if at all. Short-Run Curve Long-Run Curve Marginal cost Marginal cost Average cost Average variable cost Average cost Average expenditures Effect Long Run Now, suppose the sales tax on oven rentals is increased, so the monthly price of ovens increases to $225 per me AVC OUTPUT Effect

The following graphs depict the costs and expenses in the short run and the long run for Edison's Pizza Place. Ed pizza ovens (including sales tax) and $21 per hour for his workers. He also pays an additional $1,800 a month fo at his pizza parlour. DOLLARS Short Run ( MC AC OUTPUT DOLLARS Fill in the following table with information on how each curve is affected, if at all. Short-Run Curve Long-Run Curve Marginal cost Marginal cost Average cost Average variable cost Average cost Average expenditures Effect Long Run Now, suppose the sales tax on oven rentals is increased, so the monthly price of ovens increases to $225 per me AVC OUTPUT Effect

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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b. How is a long-run average cost curve different from a short-run average cost curve? How are they related
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Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 1 74°F Clear 2 3 440 620 800 Q = 200 280 380 480 Average Total Cost (Dollars per bike) Q = 300 Q = 400 240 320 240 320 240 240 Q = 500 480 380 280 Q = 600 800 620 440 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $440 per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using one factory On the following graph, plot the three SRATC curves for Ike's Bikes from the…
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