Use of graph, when possible, is strongly encouraged.Answers should be typed, with no specific word limit, but should not be longer than required. Make sure you are explaining your answers clearly, precisely and concisely. Good luck!Define fixed and variable costs of production. Why do you think bigger firms may have a lower average total cost (ATC) than smaller firms? Explain.Define marginal physical product of labour (MPP) and the marginal cost of the product (MC). How are these two related? Why is MC called the mirror image of MPP? Explain.Why are firms called price takers in a perfectly competitive market? Why do different firms produce different quantities despite having the same price and MR curve in perfect competition? Explain.Being the only producer in a monopoly market, can a monopolist charge a very high price to maximize profit? Why, or why not?From a societal point of view, can we claim that perfect competition and monopoly are equally efficient? Why, or why not? Explain.

1. Variable costs tend to vary based upon the amount of output being produced. They include…

Answered: Define fixed and variable costs of…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter22: Supply: The Costs Of Doing Business

Section: Chapter Questions

Problem 11E

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Use of graph, when possible, is strongly encouraged.

Answers should be typed, with no specific word limit, but should not be longer than required. Make sure you are explaining your answers clearly, precisely and concisely.

Good luck!

Define fixed and variable costs of production. Why do you think bigger firms may have a lower average total cost (ATC) than smaller firms? Explain.
Define marginal physical product of labour (MPP) and the marginal cost of the product (MC). How are these two related? Why is MC called the mirror image of MPP? Explain.
Why are firms called price takers in a perfectly competitive market? Why do different firms produce different quantities despite having the same price and MR curve in perfect competition? Explain.
Being the only producer in a monopoly market, can a monopolist charge a very high price to maximize profit? Why, or why not?

From a societal point of view, can we claim that perfect competition and monopoly are equally efficient? Why, or why not? Explain.

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