57) "If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you agree or disagree? Explain. 58) Why are there so many more proprietorships than corporations, yet corporations account for so much more of the sales of business firms in the country?

57) "If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you agree or disagree? Explain. 58) Why are there so many more proprietorships than corporations, yet corporations account for so much more of the sales of business firms in the country?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter21: Production And Costs

Section: Chapter Questions

Problem 16QP

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Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?
Modified True or False: State whether each statement is true or false. If the statement is false, briefly explain why it is so, and then restate it to make it true. The shapes of long-run cost curves follow directly from the assumption of a fixed factor of production, which implies diminishing returns. The optimal scale of plant is the scale of plant that maximizes average cost. In the long-run competitive equilibrium, each individual firm chooses a scale of operations that minimizes its long-run average cost. Answer correctly and explain within 30mins will give you positive feedback.
Graphically show the relationship between the total fixed cost, the total variable cost, and the total cost. Draw a total cost curve and total revenue curve so that at some outputs that the firm takes losses, outputs where the firm makes unnecessary profits, and where the firm makes only necessary profits. Then, pick a point where the firm is taking losses and show on the graph, the firm’s total losses. Do the same for a point (an output level) where the firm may be making unnecessary profits.
2. A firm's product sells for $4 per unit in a highly competitive market. The firm produces output using capital (which it rents at $25 per hour) and labor (which is paid a wage of $30 per hour under a contract for 20 hours of labor services). Complete the following table and use that information to answer these questions:a. Identify the fixed and variable inputs.b. What are the firm's fixed costs?c. What is the variable cost of producing 475 units of output?d. How many units of the variable input should be used to maximize profits?e. What are the maximum profits this firm can earn?f. Over what range of the variable input usage do increase marginal returns exist?8. Over what range of the variable input usage do decreasing marginal returns exist?h. Over what range of input usage do negative marginal returns exist?
“Only large firms tend to enjoy lower costs due to scale of production. Do you think large firms can compete better than smaller firms and small firms will always be at the losing end because of this?” By using concepts such as economies of scale, explain whether you agree with the statement using specific examples based on an industry of your choice.
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The following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 a) At the price of $2.20 per ice tea, what is the firm’s profit maximizing level of output? Why is this the profit maximizing level of output for the firm? b) If the market price is $8 per ice tea and the firm is producing six (6) ice tea per hour, is the firm maximizing profit or not? Why or why not? If the firm is not maximizing profit, what should it do to maximize profit? c) At the price of $8 per ice tea, what is the firm’s profit-maximizing level of output? Why is this the profit maximizing level of output? What is the firm’s economic profit at…
The following costs were estimated from steel operations in the US and Japan by Peter Marcus in Comparative Circumstances of Major Steel Mills in the US, European Community, and Japan (1982). Numbers represent costs per ton of steel for labor, capital machinery, and material inputs: Which country spent more on labor input? What are two possible reasons? If it costs $100 per ton to ship steel to the US, find the cost of Japanese steel in the US if Japanese profit is zero. If Japanese producers make a 2% profit, find the price of Japanese steel in the US. Would US producers want to allow less than 2% profit for the Japanese producers? Where will US producers want the trigger price?