Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 7, Problem 5SQ
To determine
The implication of lower average total cost
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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.
In the long run, if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200, then in this output range there are
Select one:
a. economies of scale
b. increasing marginal returns
c. diminishing marginal returns
d. decreasing marginal costs
e. diseconomies of scale
The vertical distance between ATC and AVC as output expands is aa. marginal costb. total fixed costc. average fixed cost d. economic profit per unitPlease, show your answer graphically.
Chapter 7 Solutions
Economics For Today
Ch. 7.5 - Prob. 1YTECh. 7 - Prob. 1SQPCh. 7 - Prob. 2SQPCh. 7 - Prob. 3SQPCh. 7 - Prob. 4SQPCh. 7 - Prob. 5SQPCh. 7 - Prob. 6SQPCh. 7 - Prob. 7SQPCh. 7 - Prob. 8SQPCh. 7 - Prob. 9SQP
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- Macmillan Learning a. In the accompanying diagram, place the points labeled Minimum AVC and Minimum ATC in their correct places. Marginal cost, average cost ($ per unit) True False Minimum AVC Minimum ATC F MC Quantity b. Average variable cost reaches its minimum point at a lower level of output than average total cost.arrow_forwardCost curves. a) Why does the difference between AVC and ATC get smaller as Q increases? b) Why does MC intersect AVC and ATC at their minimum points? c) Explain the difference between the short run and the long run. d) What is meant by “economies of scale”? (Hint: it has to do with long run average cost) e) Give an example of economies of scale and explain.arrow_forwardQ#43arrow_forward
- Designated cost incurred by the short-run firm. Select one: a. fixed cost b. total cost c. variable cost d. average costarrow_forwardYour company sells Beyonce concert DVDS. Total fixed costs for your operation are $10,000 a year. The variable costs are: 50Q – Q (Q is in hundreds) The firm pays $500 a year in various taxes. The market price of these DVDS is $40. Beyonce has many fans. Show your work/thought process: a. Should the firm shut down in the short run? Explain. b. If the firm's fixed costs decreased from $10,000 to $8,000, would the firm shut down in the short run?arrow_forwardCosts in the short run versus in the long run help mearrow_forward
- The 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_forwardEconomies and diseconomies of scale explain: Group of answer choices the profit-maximizing level of production. why the firm's long-run average total cost curve is U-shaped. why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point. the distinction between fixed and variable costs.arrow_forwardIn the short run, which cost is fixed and cannot be changed? a) Average cost b) Marginal cost c) Total cost d) Variable costarrow_forward
- Question 19 of 20 > (TC is total cost; VC is variable cost; Q is quantity.) ΔΤC . а. b. The amount by which total cost increases when an AQ additional unit is produced: Marginal cost Average (total) cost Average variable cost TC d. The total cost divided by the quantity of output: с. e. The change in total cost divided by the change VC f. in output: g. The sum of all costs that change as output changes divided by the number of units produced:arrow_forwardThis 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 downward-sloping segment of the long-run average cost curve corresponds to * diseconomies of scale. both economies and diseconomies of scale. economies of scale the decrease in average variable costs.arrow_forward
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