Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 7, Problem 3MC
To determine
Decreasing average cost.
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The lawn ranger , a landscaping company , has total costs of $5,000 and total fixed cost of $3000 .The lawn ranger's toal variables cost are
a. indeterminate because the firm's output level is not known.b. $3,000.c. $5,000.d. $2,000.
Draw a graph showing the fixed cost, variable cost, average total cost, marginal cost curves, and explain the graph.
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Large costs incurred in an investment that cannot be easily recovered are called
a.
Variable Costs
b.
Sunk Costs
c.
Marginal Costs
d.
Maximal Costs
Chapter 7 Solutions
Managerial Economics: A Problem Solving Approach
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Similar questions
- Diseconomies of scale are present when. Select one or more: a. total costs fall as output rises b. total costs rise as output rises O c. long run average costs rise as output rises d. marginal costs risearrow_forwardWhat type of cost is included in economic costs, but not included in accounting costs?a. Explicit costsb. Negative costsc. Normal profitd. Marginal coste. Unit costsarrow_forwardA firm earns normal profit Selected Answer: c. when explicit costs equal implicit costs. Answers: a. when accounting profit equals explicit costs. b. when economic profit equals implicit costs. c. when explicit costs equal implicit costs. d. when economic profit equals explicit costs. e. when accounting profit is less than implicit costs.arrow_forward
- 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 scalearrow_forwarda. Why will firms in most markets be located at or close to the bottom of the longrun average cost curve? b. Distinguish between implicit and explicit costs. How is it possible to havepositive accounting profit and negative economic profit concurrently? c. Distinguish between economies of scale and constant returns to scale. What shape will the long-run average cost curve have for economies of scale andconstant returns to scale. d. What is the difference between production in the short run and production in the long run? Explain the shape of the long-run cost curve in relation to shortrun cost curves?arrow_forwardThe Towson Table Company has fixed costs of $5,000 per month. Variable cost at the current level of output of 100 tables per month is $10,000. Which of the following is true for the company? A. Average cost of production is $150. Average cost of production is $100. C. Average fixed cost of production is $150. Average variable cost of production is $150. B. D.arrow_forward
- Q40 Which of the following paired concepts are equivalent to each other? a. Increasing returns; diseconomies of scale. b. Constant costs; economies of scale. c. Increasing costs; economies of scale. d. Increasing returns; increasing costs. e. Increasing returns; decreasing costs. Clear my choicearrow_forwardThe average total cost (ATC) curve will be downward sloping so long as the a. marginal cost is greater than average total cost. b. marginal cost is less than average total cost. c. average variable cost is less than average total cost. d. average fixed cost is less than average total costarrow_forwardWhich of the following cost behavior assumptions is false? (You may select morethan one answer.)a. Variable cost per unit increases as the activity increases.b. The average fixed cost per unit decreases as the activity increases.c. Total variable costs decrease as the activity decreases.d. Total fixed costs remain the same as the activity changes (within the relevant range).arrow_forward
- Diseconomies of scale exist over the range of output for which the long-run average cost curve is a. constant. b. falling. c. rising. d. none of the above.arrow_forwardWhereat for the firm operating at it efficient scale, a. the marginal cost curve intersects at the minimum point of AVC curve. b. the marginal cost curve intersects at the minimum point of ATC curve. c, the marginal cost curve intersects at the minimum point of AFC curve. d. the slope of total cost is the smallest.arrow_forward5. True, false, or uncertain? Explain briefly but specifically. a. A cost function exhibits diseconomies of scale if the marginal cost rises as output decreases. b. Short run average cost is always at least as much as long run average cost.arrow_forward
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