Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 8, Problem 2.2P
To determine
Whether to agree or disagree with the given statement.
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In the short run, the marginal cost of the first unit of output is $40, the average variable cost of producing three units of output is $32, and the marginal cost of producing the second unit of output is $32. What is the marginal cost of producing the third unit of output? (Correct answer is $24)
Why will firms in most markets be located at or close to the bottom of the long-run average cost curve?
suppose the average variable cost of production is $15 when output equals 110 haircuts and $17.26 when output equals 140 haircuts. If the firm wants to maximize profit how many haircuts will it produce at what cost? explain your answer.
Chapter 8 Solutions
Principles of Economics (12th Edition)
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- What happens to the average fixed cost, when the output of a firm increases.arrow_forwardEach graph illustrates three short-run cost curves for firms, where ATC is average total cost (also referred to as average cost), MC is marginal cost, and AVC is average variable cost. Please classify each of the graphs as valid or invalid based on what you know about the relationships between these curves.arrow_forwardIn the short run, if a marginal cost of a firm in a competitive industry is increasing while its average variable cost is upward sloping, what can you say about slope of average total cost?arrow_forward
- A firm produces identical outputs at two different plants. If the marginal cost at the first plant exceeds the marginal cost at the second plant, how can the firm reduce costs while maintaining the same level of overall output? Explain.arrow_forwardWhat factors account for a fall in the long-run cost curve?arrow_forwardIn the short-run, if the marginal cost of a firm in a competitive industry is increasing while its average variable cost is downward sloping, what can you say about slope of average total cost?arrow_forward
- Draw the cost curve of the typical firm and identify its profit maximizing rate of output and its total profitsarrow_forwardWe expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. Why?arrow_forwardWhen the marginal cost curve intersects the average variable cost curve, which of the following is true? Marginal cost is equal to marginal revenue. This is the quantity a firm would choose to produce in the short run. Average total cost is at its lowest point. Average total cost is at its highest point. Average variable cost is at its lowest point.arrow_forward
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