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 9, Problem 2.4P
To determine
Whether to agree or disagree with the given statements.
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For each statement below, explain whether it is TRUE or FALSE. In addition, defend your answer with an explanation.
(a) True or False? "In the short run, the gap between average total costs and average variable costs should grow as a company produces higher levels of output."
(b) True or False? "In the long run, a firm's average fixed costs should decline as the firm produces higher levels of output."
(c) True or False? "Whenever marginal costs are below average total costs, the firm's average total costs will decline."
I'm not sure if I am doing this correctly.
The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner.
Cheeseburger Production Costs
Quantity(burgers per hour)
Average Variable Cost (dollars)
Average Total Cost (dollars)
Marginal Cost (dollars)
0
—
—
—
10
$1.00
$6.60
$1.00
20
0.70
3.50
0.40
30
0.70
2.57
0.70
40
0.78
2.18
1.00
50
0.88
2.00
1.30
60
1.07
2.00
2.00
70
1.34
2.14
3.00
80
1.74
2.44
4.50
90
2.23
2.86
6.20
100
2.81
3.37
8.00
a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum .
b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .
Chapter 9 Solutions
Principles of Economics (12th Edition)
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