Both short-run and long-run average cost curves are likely to have a negative slope up to a given level of output/scale. What are the reasons behind such negative relationship between average costs and output in the short and the long-run?

Q: Which of the following is true:     A. Long Run Average Total Costs are always smaller or equal…

A: The first statement is True. This is because in long run, all factors of production are variable and…

Q: Marginal cost is the slope of both the average variable cost and the variable cost functions. Select…

A: Marginal cost is the change in total cost or total variable cost per unit change in output.

Q: How and why does a firm’s average-total cost curve differ in the short run compared with the long…

A: In the long run, a firm adjusts the different factors of production that are fixed in comparison in…

Q: Refer to the Long Run Average Total Cost curve below to answer the following questions:

A: Economies of scale occurs when LRAC decreases as output increases. In the given curve, LRAC…

Q: When economist Jacob Viner first developed the envelope relationship, he told his draftsman to make…

A: The Long Run Average Cost (LAC) is calculated by dividing long run total costs by the amount of…

Q: The long-run is a period of time long enough so that all inputs, including facility and equipment,…

A: PLEASE FIND THE ANSWER BELOW.

Q: The total cost of producing 25 tons of butter is 45000. If the average variable cost is $775, then…

A: TC(Total) is the cost which is incurred by a firm in producing some specific level of output. It is…

Q: How is the short-run average cost curve and the long-run average cost curve-shaped? What is the…

A: Short run average cost has fixed factors of production,whereas in long run average cost there are no…

Q: The long run average cost curve is U shaped because up to a certain point you have excess K/L and…

A: Total cost refers to the total amount of expenditure incurred by the firm ti produce the given…

Q: Please define the long cost curve and the short run cost curve in your own words but not more than…

A:

Q: Which of the following is always downward-sloping? a. The marginal cost curve when it is below the…

A: The firms, producers, and sellers are considered to one of the major players in the markets. The…

Q: A firm with only fixed costs will have which of the following average cost relationships? As…

A: Average Total Cost is calculated by dividing the total cost with units of output. Average Cost =…

Q: A hospital provides emergency-room medical care for local residents. Suppose the hospital currently…

A: Economies of scale refers to the reduction in the average total cost of production which is secured…

Q: A hospital provides emergency-room medical care for local residents. Suppose the hospital currently…

A: Given:  Suppose the hospital provides care for  Patients: 15000 Total Cost = $60,000,000   If…

Q: What shapes would you generally expect each of the following cost curves to have: fixed costs,…

A: Cost curves shows how the cost of production changes when output/quantity changes.

Q: The daily cost function for producing x printers for home computers was determined to be C(x) = x²…

A: Given  TC = C (x) = x2 + 8x + 6000

Q: For a short-run cost function which of the following statements is (are) not true?

A: The marginal cost function intersects the average variable cost function where the average variable…

Q: Suppose that the cost of all inputs (both labor and capitol) decreases. What will happen to the…

A: In economics, inputs are considered as factors of production. That means, inputs are those factors…

Q: Diseconomies of scale exists over the range of output for which the long run average cost curve is?

A: Diseconomies of scale exists over the range of output for which the long run average cost curve is…

Q: Average cost curves (except for average fixed cost) tend to be U-shaped, decreasing and then…

A: Total Costs  = Variable costs + Fixed costs AC = AFC + AVC

Q: Average cost curves (except for average fixed cost) tends to be u-shaped , decreasing and then…

A: Marginal cost is nothing but the additional cost required to produce one extra unit while average…

Q: Which of the following is always downward-sloping?  a. The marginal cost curve when it is below the…

A: Marginal cost refers to change in total cost with respect to change in output. Average total cost…

Q: Average cost decrease indefinitely as output expands.   Is that true?

A: Economies of scale signifies a scenario where a firm reaps the cost benefits while carrying out…

Q: A business incurs the following costs: • Labor: $120/unit • Materials: $45/unit • Rent:…

A: Total fixed costs are the costs that are unavoidable and have to paid irrespective of the level of…

Q: Help me answer this review question. Fill in the Blanks.  If the marginal cost equals average cost,…

A: In a market, cost curves provide significant information about the productivity and efficiency of…

Q: If a firm has economies of scale, it must have increasing returns to scale. True or false? Explain.

A: The return to scale states the change in the output with the proportionate increase of all the…

Q: Explain the following statement by using a graphical analysis: “Shape of the short-run cost curves…

A: The shape of the short-run total cost (TC) curve is cubic and that of the average cost (AC) curve is…

Q: Which of the following statements is a reflection of the fact that the average fixed cost falls as…

A: Total cost (TC) is the sum of fixed cost (FC) and variable cost (VC). i.e., TC = FC + VC…

Q: “Sunk cost is a fixed cost, but not in the long term.” Is this statement true or false? Explain!

A: In an economy, the cost is classified in different forms according to its effect on organizational…

Q: Which of the following is considered an implicit cost? PLEASE EXPLAIN.   A. Use of your labor…

A: Implicit Cost is self owned cost not need to pay to other or a cost has already occurred not…

Q: . If a firm has economies of scale, it must have increasing returns to scale. True or false? EXPLAIN…

A: Economies of scale provides cost advantage to the firm.Firm is able to lower average cost through…

Q: Which of the following statement is correct? a. Marginal cost will equal average total cost when…

A: Let's first understand what's the meaning of marginal cost. The cost which is incurred on the…

Q: Label each of the following as sunk cost, opportunity cost, or incremental costs and briefly explain…

A: The whole cost of producing a product may be included in a company's financial records as the cost…

Q: Explain why the average variable cost curve and the average total cost curve get closer to each…

A: In the short run the inputs are both fixed and variable, so all the costs incurred are also fixed…

Q: A downward-sloping portion of a long-run average total cost curve is the result of

A: The term scale of production refers to the dimension of a firm. A small-sized firm defers lower…

Q: The shape of a firm’s long-run average cost curve depends on how costs vary with the scale of…

A: There are 2 types of cost will occur by any enterprises, 1. Fixed Cost. 2. Variable cost. Fixed will…

Q: A student has just written on an exam that, in the long run, fixed cost will make the average total…

A: Long run: Long run refers to the time period that necessary to increase the production capacity or…

Q: How would each of the following affect average total cost, average variable cost, and marginal cost?…

A: GIVEN  How would each of the following affect average total cost, average variable cost, and…

Q: Average cost curves (except for average fixed cost) tend to be U-shaped, decreasing and then…

A: Average cost is the per unit cost of production. it is the ratio of total cost and output.  Marginal…

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.