Survey Of Economics
10th Edition
ISBN: 9781337111522
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 6, Problem 24SQ
To determine
The firm with diseconomies of scale from 2,000 units onward.
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In the short run , a firms total cost is $200 if it does not produce any units of output. Its variable cost is $10 per unit . If the firm produces 5 units , variable costs are ____________, while fixed costs are_____________
a) $20; $200
b)$20; $250
c) $50;$200
d)$50;$250
e) $250;$450
Economies of scale are indicated by
Multiple Choice
O
the rising segment of the average variable cost curve.
the declining segment of the long-run average total cost curve.
the difference between total revenue and total cost.
a rising marginal cost curve.
Explain what is the relationship
between marginal cost and average
total costs for a firm or industry
exhibiting each of the following:
a. Economies of scale.
b. Constant returns to scale.
c. Diseconomies of scale.
Chapter 6 Solutions
Survey Of Economics
Ch. 6.5 - Prob. 1YTECh. 6 - Prob. 1SQPCh. 6 - Prob. 2SQPCh. 6 - Prob. 3SQPCh. 6 - Prob. 4SQPCh. 6 - Prob. 5SQPCh. 6 - Prob. 6SQPCh. 6 - Prob. 7SQPCh. 6 - Prob. 8SQPCh. 6 - Prob. 9SQP
Ch. 6 - Prob. 10SQPCh. 6 - Prob. 11SQPCh. 6 - Prob. 1SQCh. 6 - Prob. 2SQCh. 6 - Prob. 3SQCh. 6 - Prob. 4SQCh. 6 - Prob. 5SQCh. 6 - Prob. 6SQCh. 6 - Prob. 7SQCh. 6 - Prob. 8SQCh. 6 - Prob. 9SQCh. 6 - Prob. 10SQCh. 6 - Prob. 11SQCh. 6 - Prob. 12SQCh. 6 - Prob. 13SQCh. 6 - Prob. 14SQCh. 6 - Prob. 15SQCh. 6 - Prob. 16SQCh. 6 - Prob. 17SQCh. 6 - Prob. 18SQCh. 6 - Prob. 19SQCh. 6 - Prob. 20SQCh. 6 - Prob. 21SQCh. 6 - Prob. 22SQCh. 6 - Prob. 23SQCh. 6 - Prob. 24SQCh. 6 - Prob. 25SQ
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- e) In the following diagram of cost curves, how many short runs have been created? State and explain which SRATC will be chosen if the firm wants to produce at Q1, Q2 and Q3. SRATC, SRATC, SRATC, Q2 Q3 Quantity of Output Average Total Cost (dollars)arrow_forwardSuppose a firm's long-run average cost is increasing as the firm produces more output. Then the firm is said to be experiencing which of the following? a.constant returns to scale b.increasing returns to scale c.diminishing marginal product d.decreasing returns to scalearrow_forwardThe figure illustrates the short-run cost curves for a company that produces cell phones Identify the average total cost curve (ATC), the average vaniable cost curve (AVC), the average fixed cost curve (AFC), and the marginal cost curve (MC) in the figure. The ATC curve is the AVC curve is the AFC curve is and the MC curve is Cost (dollars per phone) 6800 64.00 60.00- 54.00 $2.00 48.00 44.00 40.00 36.00 32.00 28.00 24.00 2000- 16.00 12.00- 8.00 400 0.00 6 Quantity (cell phones in 1000s). 0₂ C₂ C₂ ROOarrow_forward
- Use the concepts of economies and diseconomies of scale to explain the shape of a firm’s long-run ATC curve. What is the concept of minimum efficient scale? What bearing can the shape of the long-run ATC curve have on the structure of an industry?arrow_forwardRead the question and given information carefully. Show all necessary steps and reasoning that lead to the answers. You nead to draw graphs. a-Define diseconomies of scale and draw the long run average cost curve of a company that demonstrates diseconomies of scale b-List 2 reasons of diseconomies of scale and (in no more than 50 words for each reason) explain how each reason can contribute to diseconomies of scalearrow_forwardThis is a graph of our firm’s costs. Label the lines on the graph using the following labels: average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) and marginal cost (MC). Then label the shut down and breakeven points on the graph. The accountants claim that we are at our profit maximizing point. You decide to investigate potential diseconomies of scale. What diseconomies of scale do you think you might find? How could these be addressed and hopefully decrease costs? (20 points)arrow_forward
- The above cost curves are for a firm producing flour, which is measured in pounds. 1. What is the firm's total cost when it produces 200 pounds of flour? ______(Enter only a number) 2. What is the firm's fixed cost? _____(Enter only a number) 3. What is the firm's average variable cost when it produces 200 pounds of flour? _____(Enter only a number)arrow_forwardDraw the short-run average total cost (ATC), average variable cost (AVC), and marginal cost (MC) curves for a bicycle factory. Assume the usual U-shapes. Label everything. Show the efficient scale at a quantity of 120 bicycles.arrow_forwardNipam owns a firm that sells basketball apparel. As the firm's output increases, the firm's short-run marginal cost will eventually increase because of diseconomies of scale a lower product price inefficient production the firm's need to break even diminishing marginal productarrow_forward
- Consider the following table of long-run total cost for four different firms: Which firms have diseconomies of scale over the entire range of output? a. Firm 1b. Firm 2c. Firm 3d. Firm 4e. Firm 2 and 4arrow_forwardCosts in the short run versus in the long run help mearrow_forwardSection 11.5 The Short-Run and Long-Run Average Total Cost Curves exhibit 1 SRATC for small plant SRATC for medium plant SRATC tor large plant LRATC B $500 $400 Economies of Scale Constant Returns to Saie 1,000 1,200 Quantity of Computers (per day) Notice that the long-run average total cost (LRATC) curve is much flatter than the short-run average total cost (SRATC) curve. This is because firms can be more flexible in the long run-they can choose which short-run cost curve they want to operate along, by choosing their plant scale. But they cannot do this in the short run, during which they are stuck with their existing short-run cost curve. That is, in the short run, the firm operates with the short-run curve it has based on past decisions. However, in the lang run, the firm is able to choose the short-run curve it wants to use. In Exhibit 1 above, explain why the curve between A and B looks different than the curve from A to C. Provide an example of how a firm could opt to follow the…arrow_forward
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