Principles of Microeconomics
7th Edition
ISBN: 9781305156050
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.
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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
Principles of Microeconomics
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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Similar questions
- How do we calculate each of the following: marginal cost, average total cost, and average variable cost?arrow_forwardWhat 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?arrow_forwardConsider the production of hamburgers. The average total cost (ATC) and average fixed cost (AFC) of producing hamburgers are illustrated in the graph to the right Use the four-point curve drawing tool to graph the average variable cost of producing one, two, three, and four thousand hamburgers. Properly label this curve Carefully follow the instructions above, and only draw the required objects. Cost (cente per unit) 26 24- 22- 20 18- 16 14- 12- 10 B 6 4- 2 ATC AFG Quantity of hamburgers (in 1000s) Q duarrow_forward
- E2arrow_forwardQUESTION 6 At a total cost of $3,100, a company can produce 4 scooters. It has fixed costs of $1,000. If it produces 5 scooters, the costs of production total $3,800. Which of the following statements is true? O Variable costs of producing 4 scooters total $3096. O The average (or per unit) cost of producing 5 scooters is $800 per scooter The total cost curve for this firm is downward sloping Fixed costs will be higher when it produces 5 scooters The marginal cost of producing the fifth scooter is $700arrow_forwardWhat was her economic profit or loss for the year?arrow_forward
- 7. A firm can build a plant of three different sizes. The short-run average total cost curves of each size plant are as follows: Plant A Plant B Plant C Output Average Total Cost Output Average Total Cost Output Average Total Cost 1 20 20 30 20 50 5 18 40 20 50 20 10 15 60 10 400 3 20 20 80 20 600 8 25 40 100 50 800 20 What is the long-run average cost of producing 20 units of output? Why?arrow_forward(1) Use the graph to answer the question. The graph illustrates that A-the firm's fixed costs are increasing. B-the firm is producing fewer units at every cost level C-the firm is failing to employ division of labor. D-the firm's variable and total costs are decreasing E-the firm is experiencing increasing marginal returns (2)A firm has fixed costs of $100 at 10 units. If its variable costs at 15 units are $100, what must its total cost be to produce 15 units? A-$100. B-$200. C-$250 D-$1,500. E-$2,500arrow_forward(1) Use the graph to answer the question. The graph illustrates that A-the firm's fixed costs are increasing. B-the firm is producing fewer units at every cost level C-the firm is failing to employ division of labor. D-the firm's variable and total costs are decreasing E-the firm is experiencing increasing marginal returns (2)A firm has fixed costs of $100 at 10 units. If its variable costs at 15 units are $100, what must its total cost be to produce 15 units? A- $100. B-$200. C-$250. D-$1,500. E-$2,500 (3) Use the graph to answer the question. Between points C and D, the long-run average total cost curve is characterized by ________ because the firm is experiencing ________ returns to scale. A-constant returns; constant. B-economies of scale; increasing. C-economies of scale; constant D-diseconomies of scale; increasing. E-diseconomies of scale; decreasingarrow_forward
- Please give me proper calculation and full explanation otherwise i give downvotearrow_forwardRefer to Figure 13-4. Curve A represents which type of cost curve? O marginal cost O average total cost O average variable cost average fixed costarrow_forwardQuestion 7 When a firm produces 100 units of output, the firm's marginal cost is $10, average variable cost is $5 and average total cost is $8. What is the fixed cost? O $100 O $200 $0 O $300 O $50arrow_forward
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