Bundle: Principles of Economics, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
8th Edition
ISBN: 9781337378710
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 13.3, Problem 3QQ
To determine
Marginal cost for a fifth car.
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Suppose Honda’s total cost of producing 4 cars is $225,000 and its totalcost of producing 5 cars is $250,000. What is the average total cost of producing 5 cars?
What is the marginal cost of the fifth car? • Draw the marginal-cost curve and the average-total-cost curve for a typical firm, and explain why these curves cross where they do.
© Macmillan Learning
The figure depicts the long-run average total cost curve for Magma Motors. If this firm is currently producing 11,000 cars
per year, what does it experience if it increases output by 1,000 cars?
Figure: Long-Run Average Total Cost Curve for Magma Motors
Cost
(per car)
$5,000
4,000
0
Long-run
average
total cost
$10,000
11,000 12,000
Quantity
economies of scope
economies of scale
minimum efficient scale
diseconomies of scale
20
15
LRAC
10
10
15
20
25
30
Quantity (units per hour)
1. In the above figure, the long run average cost LRAC, between 0 and 10 units per hour what does the firm exhibit (Economies of scale, Diseconomies of
scale or constant return to scale)?
2. In the above figure, the long run average cost LRAC, between 10 and 20 units per hour what does the firm exhibit (Economies of scale, Diseconomies of
scale or constant return to scale)?
3. In the above figure , the long run average cost LRAC, between 20 and 30 units per hour what does the firm exhibit (Economies of scale, Diseconomies of
scale or constant return to scale)?
В
I
Cost (dollars per unit)
Chapter 13 Solutions
Bundle: Principles of Economics, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
Ch. 13.1 - Prob. 1QQCh. 13.2 - Prob. 2QQCh. 13.3 - Prob. 3QQCh. 13.4 - Prob. 4QQCh. 13 - Prob. 1CQQCh. 13 - Prob. 2CQQCh. 13 - Prob. 3CQQCh. 13 - Prob. 4CQQCh. 13 - Prob. 5CQQCh. 13 - Prob. 6CQQ
Ch. 13 - Prob. 1QRCh. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QRCh. 13 - Prob. 8QRCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - Prob. 6PACh. 13 - Prob. 7PACh. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PA
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