Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 7, Problem 28RQ
What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An economy originally operates at the full employment output level. Suppose the economy suddenly experiences a rapid growth in aggregate demand.
a. With the aid of an AS-AD diagram, explain why there will be inflationary pressure in
the short run.
b. suppose the government does not intervene. Using the same diagram in part (a) and with reference to the market adjustment mechanism from the short run to the long run, explain whether the inflationary pressure can be relieved in the long run.
C. With the aid of another diagram, suggest ONE fiscal policy that can deal with the inflation.
Suggest THREE methods that the government can use to promote economic growth in the long run.
The table below shows pizza topping preferences for Marcus, Dakota, and Austin, and that each individual has strictly transitive preferences. Suppose that three individuals
make up our "society." In this society, prefer pepperoni to cheese pizza; _prefer cheese to supreme; and prefer supreme to pepperoni. This example illustrates that
_
Person
Marcus
Dakota
Austin
0000
First Preference
Pepperoni
Supreme
Cheese
Second Preference
Cheese
Pepperoni
Supreme
Third Preference
Supreme
Cheese
Pepperoni
two-thirds; two-thirds; two-thirds; even if individuals' preferences might satisfy the transitive property, societal preferences may not.
two-thirds; two-thirds; everyone; if individuals' preferences satisfy the transitive property, societal preferences must also.
two-thirds; two-thirds; everyone; even if individuals' preferences might satisfy the transitive property, societal preferences may not.
two-thirds; two-thirds; two-thirds; if individuals' preferences satisfy the transitive property,…
Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics &
criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health
and criminology professors all have the same level of health.
In 2020, every professor was offered a full insurance contract with no premium. In 2021, HU charged any employee who wanted to keep health insurance the actuarially fair
premium based on 2020 expenditures. This premium would be equal to and, as a result,professors dropped their coverage in 2021.
_
2020
2021
Insured? Avg. Expenditures Insured? Avg. Expenditures
Economics Professors
Criminology Professors Yes
Yes $25,000
$15,000
000000
$15,000; criminology
$25,000; econ
$20,000; econ
$15,000; econ
$20,000; criminology
$25,000; criminology
???
$28,000
???
$10,000
Chapter 7 Solutions
Principles of Economics 2e
Ch. 7 - A firm had sales revenue of 1 million last year....Ch. 7 - Continuing from Exercise 7.1, the films factory...Ch. 7 - The WipeOut Ski Company manufactures skis for...Ch. 7 - Based on your answers to the WipeOut Ski Company...Ch. 7 - If two painters can paint 200 square feet of wall...Ch. 7 - Return to the problem explained in Table 7.13 and...Ch. 7 - Suppose the cost of machines increases to 55,...Ch. 7 - Automobile manufacturing is an industry subject to...Ch. 7 - What are explicit and implicit costs?Ch. 7 - Would you consider an interest payment on a loan...
Ch. 7 - What is die difference between accounting and...Ch. 7 - What is a production function?Ch. 7 - What is the difference between a fixed input and a...Ch. 7 - How do we calculate marginal product?Ch. 7 - What shapes would you generally expect a total...Ch. 7 - What are the factor payments for land, labor, and...Ch. 7 - What is the difference between fixed costs and...Ch. 7 - How do we calculate each of the following:...Ch. 7 - What shapes would you generally expect each of the...Ch. 7 - Are there fixed costs in the lung-run? Explain...Ch. 7 - Are fixed costs also sunk costs? Explain.Ch. 7 - What are diminishing marginal returns as they...Ch. 7 - Which costs are measured on per-unit basis: fixed...Ch. 7 - What is a production technology?Ch. 7 - In choosing a production technology, how will...Ch. 7 - What is a long-run average cost curve?Ch. 7 - What is the difference between economies of scale,...Ch. 7 - What shape of a long-run average cost curve...Ch. 7 - Why will firms in most markets be located at or...Ch. 7 - Small Mom and Pop firms, like inner city grocery...Ch. 7 - A common name for fixed cost is overhead. If you...Ch. 7 - How does fixed cost affect marginal cost? Why is...Ch. 7 - Average cost curves (except for avenge fixed cost)...Ch. 7 - What is the relationship between marginal product...Ch. 7 - It is clear that businesses operate in the short...Ch. 7 - Retune to Table 7.2. In the top half of the table,...Ch. 7 - How would an improvement in technology, like the...Ch. 7 - Do you think that the taxicab industry in large...Ch. 7 - A firm is considering an investment that will earn...Ch. 7 - Return to Figure 7.7. What is the marginal gain in...Ch. 7 - Compute the average total cost, average variable...Ch. 7 - A small company that shovels sidewalks and...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Depreciation Methods, Disposal. Kurtis Koal Company, Inc. purchased a new mining machine at a total cost of 900...
Intermediate Accounting (2nd Edition)
An experimental composite engine block for an automobile will trim 20 pounds of weight compared with a traditio...
Engineering Economy (17th Edition)
(Preferred stock valuation) What is the value of a preferred stock when the dividend rate is 16 percent on a $1...
Foundations Of Finance
The price of Country E’s call option for one year. Introduction: Put-call parity is defined as the relationship...
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
What is a qualitative forecasting model, and when is its use appropriate?
Operations Management
4. JC Manufacturing purchase d inventory for $ 5,300 and al so paid a $260 freight bill. JC Manufacturing retur...
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics & criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health and criminology professors all have the same level of health. There is evidence of 2021 Insured? Avg. Expenditures Insured? Avg. Expenditures 2020 Economics Professors Criminology Professors Yes. Yes $25,000 $15,000 0000 ??? ??? $28,000 $10,000 I. moral hazard because in 2021 criminology professors dropped their coverage and health expenditures went down. II. adverse selection because in response to rising premiums after 2020, the professors with lower health expenditure dropped coverage Both I and II neither I nor IIarrow_forward0000 Health Suppose that you graph nations' health expenditures against income and see that the US's point lies below others (like in the stylized figure below). From the graph below, it appears that the US is However, this may not be the case if_ Switzerland UK US HPF Health expenditures productively inefficient; The US has a population that prefers spending their resources on health productively efficient; The US has a population that prefers spending their resources on health productively efficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others. productively inefficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others.arrow_forwardPlease match the definition to the term that best fits. This occurs when less-risky people are more likely to enroll in health insurance. How much spent out-of-pocket before insurance kicks-in. When no more units of a good can be produced without decreasing the amount of another good or service The amount that the insurance company pays the customer when an insured event occurs. When an individuals income is state independent Behavior changes that occur before an insured event happens and make that event more likely to occur. The fraction of the medical bill that the consumer is responsible for. The fixed amount that is paid for a service at the time service is rendered. This occurs when marginal benefit of a good to a consumer is equal to marginal cost of production Behavior changes that occur after an insured event happens and make recovering from that event more expensive. Monthly fee to enroll in insurance The oversupply of low-quality goods, products, or contracts that results…arrow_forward
- for the 2nd part the last option got cut off, there is also a none of the above choice tooarrow_forwardMCB MCA The figure to the right shows the marginal cost of pollution abatement for two firms, A and B. The firms were initially abating 36 units of pollution each. Now they can trade pollution permits at a price of $32. As a result, firm permits and firm B A permits. Both firms are now better off and their total saving will be (Enter your answer rounded to the nearest $ whole number.) Dollars per Unit ($) 44 32 20 The Efficiency of Tradable Pollution Permits 31 36 41 Quantity of Pollution Abatement k -6°C Mostly clear Nextarrow_forwardThe figure to the right shows the marginal costs of abatement for an industry's only two firms, A and B. These firms were initially abating 30 units of pollution (the vertical dashed line). Now they can trade permits. The market price for permits under which an efficient pollution abatement will be achieved is $ rounded to the nearest whole number.) 192 176- 160- (Enter your response 144- 128- 112- 96 80- 64- 48- 32- 16 0 0 MC MCB 10 20 30 40 50 60 70 80 90 100 110 12 Pollution Abatement -6°C Mostly clear Nextarrow_forward
- The figure shows the private and social marginal costs and the marginal benefit of producing paper. The marginal social net benefit derived from the production of paper is OA. maximized at an output level of 35 because that is where MCp equals MB. OB. maximized at an output level of 25 because that is where MCs equal MB. OC. zero at an output level of 25 because that is where MCs equals MB. OD. zero at an output level of 35 because that is where MCp equals MB Dollars per Unit 25 35 Quantity of Paper -6°C Mostly clear D=MB Next MCS MCarrow_forwardRefer to the given figure. MB and MC represent the social marginal benefit and social marginal cost of pollution abatement. The total net benefit from the optimal level of pollution abatement is $ (Enter your response rounded to the nearest whole number.) D Dollars per Unit 0 MC 18 810 Pollution Abatement -6°C Mostly clear Next MBarrow_forwardSuppose that each firm pollutes 100 units and is given 70 pollution permits (i.e., each firm must reduce pollution by 30 units if they do not trade their permits). If firms are allowed to trade their permits, then the equilibrium price of permits will be and permits. and as a result of being able to trade their OA. $10; firm A buys 20 permits from firm B profits fall by $200 for A and rise by $200 for B OB. $10; firm A buys 20 permits from firm B profits rise by $40 for A and rise by $40 for B OC. $12; firm A sells 10 permits to firm B; profits rise by $40 for A and rise by $40 for B OD. $12, firm A buys 10 permits from firm B profits fall by $120 for A and rise by $120 for B E. None of the above Marginal Abatement Cost ($) 18 16- 4 12- 10- 8- MCA 0 10 20 30 40 50 60 70 80 Pollution Abatement 90 -6°C Mostly clear Next M 40arrow_forward
- Consider an economy in which there are two polluters: A and B. The marginal cost of pollution abatement curves are given in the diagram to the right. The total cost of reducing pollution by 60 units if it is done efficiently or $ equals $ if it is done by forcing each firm to reduce pollution by 30 units. OA. 925; 1125 OB. 900; 1100 OC. 850, 1050 OD. 800, 1000 OE. None of the above The efficient levels of pollution reduction can be achieved by using a pollution tax equal to $ unit A. 25 0 per MC 45 40 35 30- 25 20- 15 10- 5- Marginal Abatement Cost ($) 10 20 30 40 50 60 70 80 Pollution Abatement -6°C Mostly clear Next 90arrow_forwardis initially abating Q units of pollution. Suppose that a system of tradeable pollution permits is introduced into this market and the equilibrium permit price is P* Firm B will sell permits to Firm A because OA. Firm A has lower costs of pollution abatement than Firm B. OB. Firm B's total cost of abating more pollution (area 1) is less than the revenue it earns from selling the permits (areas 5+3). OC. Firm B's total cost of abating more pollution (areas 3+1) is less than the revenue it earns from selling the permits (areas 5+3+1). OD. Firm B can buy the permits at a lower price than Firm A OE. the revenue Firm B earns from selling permits (areas 3+1) is greater than the cost it incurs from abating more pollution (area 1). Dollars per unit Q₁ Qo Q2 Pollution Abatement ил Next -6°C Mostly clear MCA MCBarrow_forwardThe accompanying diagrams show the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. If the government requires each firm to abate Q units of pollution, the social costs of this abatement OA. could be reduced further if Firm 2 increased abatement and Firm 1 reduced its abatement by the same amount OB. could be reduced further if each firm was required to abate more. OC. could be reduced further if each firm was allowed to pollute more. OD. would be minimized. WOE could be reduced further if Firm 1 increased abatement and Firm 2 reduced its abatement by the same amount. Dollars 5 Firm 1 MC1 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Abatement Q Firm 2 6- MC2 E 屈 Dollars -6°C Mostly clear Nextarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning