4. Indicate how each of the following would shift the (1) MC curve, (2) AVC curve, (3) AFC curve, and (4) ATC curve of a manufacturing firm. In each case specify the direction of the shift. a. A reduction in business property taxes b. An increase in the nominal wages of production workers c. A decrease in the price of electricity d. An increase in insurance rates on plant and equipment e. An increase in transportation costs

4. Indicate how each of the following would shift the (1) MC curve, (2) AVC curve, (3) AFC curve, and (4) ATC curve of a manufacturing firm. In each case specify the direction of the shift. a. A reduction in business property taxes b. An increase in the nominal wages of production workers c. A decrease in the price of electricity d. An increase in insurance rates on plant and equipment e. An increase in transportation costs

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 8QR

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(a) Complete the following table and draw the corresponding graphs. Capital inputs Labor inputs Total product Average product Marginal product 20 0 0 20 1 15 20 2 34 20 3 51 20 4 65 20 5 74 20 6 80 20 7 80 20 8 75 (b) What is relationship between MP and AP? Explain why MP first rises, then declines and ultimately becomes negative? (c) Whether the above phenomenon is long run or short run and why? (d) Does law of diminishing marginal returns holds in above scenario? Why and why not.
WW is a small automobile manufacturer. The table below shows WW’s long-run average total cost: Quantity of cars LRATC of car 1 $60,000 2 40,000 3 30,000 4 24,000 5 24,000 6 24,000 7 28,000 8 36,000 which levels of output does WW experience economies of scale? ___________ which levels of output does WW experience diseconomies of scale? ___________ which levels of output does WW experience constant returns to scale? ___________
6. Which of the following are true (check all that apply) Note: IRTS=increasing returns to scale, CRTS=constant returns to scale, DRTS=decreasing returns to scale a. if the production function exhibits IRTS, then the cost function will exhibit economies of scale b. if the production function exhibits IRTS, then the cost function will exhibit diseconomies economies of scale c. if the cost function exhibits diseconomies of scale, then the producing function exhibits DRTS d. if the production function exhibits CRTS, then the cost function will exhibit constant economies of scale e. if the production function exhibits DRTS then the cost function will exhibit diseconomies of scale
2. If a firm has economies of scale, it must have increasing returns to scale. True or false? EXPLAIN IN DETAIL.
QUESTION 1a. Is it possible to have diminishing returns to a single factor of production and constant returnsto scale at the same time? Discuss.b. Isoquants can be convex, linear, or L-shaped. What does each of these shapes tell you aboutthe nature of the production function? What does each of these shapes tell you about theMRTS?QUESTION 2a. A firm faces the following average revenue (demand) curve:P = 120 − 0.02Qwhere Q is weekly production and P is price, measured in cents per unit. The firm’s costfunction is given by C = 60Q + 25,000. Assume that the firm maximizes profits.i. What is the level of production, price, and total profit per week?ii. If the government decides to levy a tax of 14 cents per unit on this product, what will be thenew level of production, price, and profit?b. The United States currently imports all of its coffee. The annual demand for coffee by U.S.consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions ofpounds) and P is the…
Suppose that A Explain the reasons that might lead to an increase in A and show graphically the short and long-run impact of such a change. Make sure to clearly explain your reasoning.
5. In the long run A. output is fixed. B. all inputs can be varied. C. some inputs are variable and other inputs are fixed. D. all inputs are fixed. 10. The LRAC curve generally is upward sloping. shaped as an upside-down U. U-shaped. downward sloping.
1. a) How the shape of the total variable cost curve (TVC) and total cost curve (TC) is related with the law of diminishing marginal returns in the short-run. Support your explanations with graphs and formula/equations. b) Explain why the short-run marginal cost curve (MC) must intersect the average variable cost curve (AVC) at the minimum of the AVC.
8. If the fixed input is the two hectare of land and the variable input is fertilizer explain how the principle of diminishing return work in the outputs.
WW is a small automobile manufacturer. The table below shows WW’s long-run average total cost: Quantity of cars LRATC of car 1 $60,000 2 40,000 3 30,000 4 24,000 5 24,000 6 24,000 7 28,000 8 36,000 a. For which levels of output does WW experience economies of scale? ___________ b. For which levels of output does WW experience diseconomies of scale? ___________ c. For which levels of output does WW experience constant returns to scale? ___________
Question 1 Capital (K) Labor (L) Total Product (TP) Average Product (AP) Marginal Product (MP) 10 0 0 10 1 5 10 2 15 10 3 30 10 4 50 10 5 75 10 6 85 10 7 90 10 8 92 10 9 92 10 10 90 1.1 From the information in the table, calculate marginal and average product of each level of output. 1.2 At what point of output does diminishing marginal returns occur?
1- Define the following Terms - Isoquant - Marginal rate of technical substitution - Production function - Economies of scope