Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 7, 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
In the long run, if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200, then in this output range there are
Select one:
a. economies of scale
b. increasing marginal returns
c. diminishing marginal returns
d. decreasing marginal costs
e. diseconomies of scale
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.
Chapter 7 Solutions
Economics For Today
Ch. 7.5 - Prob. 1YTECh. 7 - Prob. 1SQPCh. 7 - Prob. 2SQPCh. 7 - Prob. 3SQPCh. 7 - Prob. 4SQPCh. 7 - Prob. 5SQPCh. 7 - Prob. 6SQPCh. 7 - Prob. 7SQPCh. 7 - Prob. 8SQPCh. 7 - Prob. 9SQP
Ch. 7 - Prob. 10SQPCh. 7 - Prob. 11SQPCh. 7 - Prob. 1SQCh. 7 - Prob. 2SQCh. 7 - Prob. 3SQCh. 7 - Prob. 4SQCh. 7 - Prob. 5SQCh. 7 - Prob. 6SQCh. 7 - Prob. 7SQCh. 7 - Prob. 8SQCh. 7 - Prob. 9SQCh. 7 - Prob. 10SQCh. 7 - Prob. 11SQCh. 7 - Prob. 12SQCh. 7 - Prob. 13SQCh. 7 - Prob. 14SQCh. 7 - Prob. 15SQCh. 7 - Prob. 16SQCh. 7 - Prob. 17SQCh. 7 - Prob. 18SQCh. 7 - Prob. 19SQCh. 7 - Prob. 20SQCh. 7 - Prob. 21SQCh. 7 - Prob. 22SQCh. 7 - Prob. 23SQCh. 7 - Prob. 24SQCh. 7 - Prob. 25SQ
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- 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.arrow_forwarde) 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_forwardHow does the impact of fixed costs change production decisions in the short run and in the long run? Use the average-total-cost (ATC) model in the photo to answerarrow_forward
- The 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_forwardUse 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_forward
- This 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_forwardThe 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_forward
- Nipam 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_forwardIke'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.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 %3D 1 440 280 240 320 480 800 2 620 380 240 240 380 620 800 480 320 240 280 440 Suppose Ike's Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost is s per bike. Suppose Ike's Bikes is expecting to produce 600 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three SRATC curves for Ike's Bikes from the previous table.…arrow_forwardCosts in the short run versus in the long run help mearrow_forward
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