Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 9, Problem 2.4P
To determine
Whether to agree or disagree with the given statements.
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Students have asked these similar questions
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."
It is the month of June, which is the peak season for producing rye. At the current level of
output of 800 units of wheat, the following data exists:
Price = $16
Marginal cost = $8
Marginal Revenue-$8
Average variable cost = $10
Average total cost = $19
Based on these figures, as an microeconomic advisor, what would you advise this firm to do?
The firm should shut down production.
Not sure.
The firm should raise the price and make a loss.
The firm should continue to produce more wheat.
Douglas Fur is a small manufacturer of fake-fur boots in Dallas. The following table shows the company’s total cost of production at various production quantities.
On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $155, so you should start your ATC curve by placing a green point at (1, 155). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $95, so you should start your MC curve by placing an orange square at (0.5, 95).)
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
Chapter 9 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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