Bundle: Principles of Economics, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
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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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)
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