Explain how a firm can have constant returns to scale in production and economies of scale in cost.

Q: Explain how input, output and cost are interrelated

A: A business needs to make use of inputs for turning them into outputs that could finally be sold in…

Q: Identify and describe three examples of economies of scale and three examples of diseconomies of…

A: Companies benefit from economies of scale as their production becomes more productive. Economies of…

Q: The most efficient scale of production of a firm is where

A: To find : Which is most effective case of efficient scale of production.

Q: If a firm quadruples (4x) in size and output increases sixfold (6x), what is the returns to scale?

A: Here input increase 4× and output increase 6×

Q: explain with graphs the difference between economies of scale, economies of scope and returns to…

A: Economies of Scale  An economy of scale is the expense advantage an organization has with the…

Q: Explain how the stages of production are determined. Give information about the shape and slope of…

A: A production function shows the unique relationship between inputs and outputs. It shows the maximum…

Q: Why do Economies of Scale Occur? A. Large firms cover their fixed costs by producing lots of units…

A: Fixed cost is constant and remains same at all levels of output. Average cost refers to total cost…

Q: Why does as output increases, average variable cost initially declines and eventually begins to…

A: In an economy, the cost is analyzed in different ways, such as total cost, marginal cost, average…

Q: 35) What is the firm’s efficient scale?  A. the quantity of output that minimizes average total…

A: (35)  A firm's efficient scale implies the production of output such that it minimizes the average…

Q: Is it true the statement that if average production cost is increasing, a firm’s technology exhibits…

A: In a two factor production function, the scale of production refers to the quantity of labour and…

Q: What does average fixed cost fall with increase in output?

A: Fixed cost per unit of output is known as average fixed cost. Because the same amount of fixed costs…

Q: Why does the average fixed cost falls with the increase in output?

A: Fixed cost is that cost which doesn't Change in the short run as the production proceeds.  Average…

Q: Explain how a firm may transition from the short-run production decision to the long-run production…

A: In short-run, Price = short-run marginal cost (SMC). The firm would produce that output at which P…

Q: Assume that the marginal cost of production is greater than the average variable cost. Can you…

A: The marginal cost of production is the incremental cost incurred when an additional unit of a good…

Q: A firm has economies of scale, it must have increasing returns to scale. Explain?

A: Economies of scale are cost advantages experienced by firms when production becomes efficient.…

Q: When examining the costs faced by a business, explain how economists distinguish between the short…

A: First part The contrast between the short and long runs is critical in economics. It turns out that…

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

A: Economies of scale refers to one of the competitive advantages that allow a firm to capture most of…

Q: What factors give rise to increasing returns to scale and decreasing returns to scale?

A: Increasing returns to scale means when all inputs are increased, the output is increased by more…

Q: What are the advantages of internal economies of scale ? Explain shortly.

A: Internal economies of scale mean the company improves output when the average cost of the product…

Q: what is the importance of long run and short run production in production theory?

A: A production function is a functional relationship between the inputs which are used in the process…

Q: hi  Suppose you build bird houses. One day, you double the time you spend building and double the…

A: Consider the definition of returns to scale. When we change all factors of production by a certain…

Q: Evaluate the view that having a business objective of increased economies of scale is always…

A: ii) Economies of scale refer to when there is an increase in the production of goods and services…

Q: A firm produces identical outputs at two different plants. If the marginal cost at the first plant…

A: The firm seeks to maximize the profit. The profit is maximized where the MR=MC. Firm can use its…

Q: True or false. In general, production can display diminishing returns in all variables but still…

A: Diminishing returns are defined as a decrease in output due to an increase in the input after an…

Q: Average fixed cost, average total cost a -Why does average fixed cost continuously fall as output…

A: Average fixed cost- It is the cost that is per unit of Total fixed cost. AFC=TFCQ Average total…

Q: Use the concepts of economies and diseconomies of scale to explain the shape of a firm’s long-run…

A: Economies of scale are the profits or advantages that firms earn due to their size of the operation.…

Q: How does the firm increase its production in the long-run? What input/s can it use to increase…

A: The process of production is the transformation of the raw materials into the final finished goods…

Q: Explain how a firm is able to deal with both fixed and variable costs at the same time

A: Fixed cost is the cost of production which does not change or constant whatever the amount of good…

Q: What is the difference between decreasing returns to scale and diminishing marginal product?

A: Meaning of Law of Variable Proportions: The term law of variable proportions refers to the…

Q: Is it true that if a firm’s technology exhibits the decreasing return to scale, then average…

A: Introduction The scale of production in two factor production function means a given amount of labor…

Q: Explain the relationship between the production function and the average costs and marginal costs…

A: Answer: Production function/Total product: production function shows the relationship between output…

Q: Explain any assumptions and arguments we must use in order to conjecture that firms choose the…

A: Once a firm has determined the least expensive manufacturing technology, it will consider the…

Q: Firms are facing a lot of challenges when dealing with their costs of production. Analyze a fixed…

A: Fixed cost refers to the cost of production that the firm has to incur irrespective of output. This…

Q: The average variable cost curve and the average total cost curve get closer to each other as output…

A: The average variable cost refers to the variable cost per unit. The average total cost is the…

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: Explain the difference between fixed cost and the variable cost in economics.

A: In economics, cost refers to all the expense that has been incurred in order to produce goods and…

Q: What is the difference between production in the short run and production in the long run? Explain…

A: