Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 7, Problem 25SQ
To determine
The firm with economies of scale.
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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
Which of the following would shift a firm's short-run cost curves downward? a.an increase in excise taxes levied on the firm's product b.an increase in the demand for the firm's product c.an advance in technology d.an increase in employees' wages
(1) 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; decreasing
The graph is attached on the following
(2) If a firm is operating at a point on its long-run average total cost curve where the slope is negative, it is
A-experiencing increasing returns to scale. B-experiencing constant returns to scale
C-experiencing decreasing returns to scale. D-achieving efficient scale. E-making progressively less as it increases its inputs
(3) If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true?
A-Average total cost < price; marginal cost = marginal revenue
B-Average total cost > price; marginal cost = marginal revenue
C-Average…
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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- 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_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_forwardA firm’s marginal product will be at a maximum at which of the following levels of output? A less than the quantity where average cost is a minimum. B greater than the quantity where marginal cost is a minimum. C greater than the quantity where average cost is a minimum. D less than the quantity where marginal cost is a minimum.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_forwardCosts in the short run versus in the long run help mearrow_forwardGive typing answer with explanation and conclusionarrow_forward
- 4.a) Consider the following table for a wheat farmer in long run: Q (wheat) 12 345 6 7 VC (in TK) 20 30 60 120 240 500 700 Calculate ATC for each unit. Then find out minimum efficient scale. b)What are the relationships between ATC and MC? Explain it with a relevant graph.arrow_forwardShort-run average total cost shows the minimum average total cost for each level of output that can be produced has a minimum point at the firm's minimum cost for that relevant range of production might have a upward-sloping segment that indicates dis-economies of scale might have a flat portion that indicates a constant average cost over that range of output. might have a downward-sloping segment that indicates economies of scalearrow_forwardThe graph below illustrates a series of short-run average cost curves, numbered AC, through AC5, which correspond to five different plant sizes, which are the only sizes possible. AC AC 48 AC AC AC, 24 12 280 560 40 1120 1400 1680 1960 Quantity of output a. What is true about output levels 280, 560, 840, 1,120, and 1,400? (Click to select) b. What is the right size of a plant to produce an output of 700? (Click to select) c. Between what plant sizes does the firm experience economies of scale? (Click to select)arrow_forward
- Draw 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_forwardThe curves in this figure reflect information about the average total cost, average fixed cost, average variable cost, and marginal cost for a firm. Cost (8) Quantity of Output When is this particular firm necessarily experiencing increasing marginal product? when curve A is falling when curve B is falling when curve C is falling when curve D is fallingarrow_forwardwhat is meant by the term Cost of production? Distinguish between fixed and variable cost. Why short run average cost and marginal cost curve generally U-Shaped?arrow_forward
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