The most efficient scale of production when Q= 65 is to be determined. Concept Introduction: Efficient scale of production : is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Question

The preferences of a consumer are represented by the following utility function: U = min (×1, 2x2) If income is 100 and p1=p2=1 a) What is the optimal bundle? b) If p₁=4, what is the new optimal bundle? c) If p2=4, what is the new optimal bundle? d) Decompose the price effect into income and substitution effect and provide a graphical representation of your results.

Answer 1

Question

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

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The preferences of a consumer are represented by the following utility function: U = min (×1, 2x2) If income is 100 and p1=p2=1 a) What is the optimal bundle? b) If p₁=4, what is the new optimal bundle? c) If p2=4, what is the new optimal bundle? d) Decompose the price effect into income and substitution effect and provide a graphical representation of your results.

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Answer 2

Question

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

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Answer 3

Question

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Expert Solution & Answer

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Answer 4

Question

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Expert Solution & Answer

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Answer 5

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Answer 6

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Answer 7

Chapter 7, Problem 4.10P

A

To determine

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Answer 8

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Answer 9

B

To determine

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Answer 10

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Answer 11

C

To determine

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Answer 16

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Answer 18

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Answer 19

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Answer 23

Ch. 7 - Prob. 1.1P Ch. 7 - Prob. 1.2P Ch. 7 - Prob. 1.3P Ch. 7 - Prob. 1.4P Ch. 7 - Prob. 2.5P Ch. 7 - Prob. 2.6P Ch. 7 - Prob. 3.7P Ch. 7 - Prob. 3.8P Ch. 7 - Prob. 3.9P Ch. 7 - Prob. 4.10P

The most efficient scale of production when Q= 65 is to be determined. Concept Introduction: Efficient scale of production : is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Concept explainers

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Chapter 7 Solutions

The most efficient scale of production when Q= 65 is to be determined. Concept Introduction: Efficient scale of production : is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

Concept explainers

To Determine: The most efficient scale of production when Q= 65 is to be determined. Concept Introduction: Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

To Determine: The most efficient scale of production when Q= 75 is to be determined. Concept Introduction: Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

To Determine: The long run average cost is to be traced on the diagram. Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.

Chapter 7 Solutions

To Determine:

The most efficient scale of production when Q= 65 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

To Determine:

The most efficient scale of production when Q= 75 is to be determined.

Concept Introduction:

Efficient scale of production: is defined as the point which is the lowest and where the firm (or plant) can produce so that the long run average costs are minimized.

To Determine:

The long run average cost is to be traced on the diagram.

Concept Introduction: The long run average cost curve is the lowest cost curve for each output level.