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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?Explain some of the different factors that would affect a firm’s profitability and what might make a firm’s profits particularly volatile.what happens to ATC and MC when companies increase the productive capabilities after they invest in human or physical capital, or new technology or they improve their managerial capabilities.
- People often believe that large firms in an industry have cost advantages over small firms in the same industry. For example, they might think a big oil company has a cost advantage over a small oil company. For this to be true, what condition must exist? Explain your answer.Use the following table and use your previous calculations: find the quantity where ATC is at a minimum and find the quantity that is the most efficient operating point for the firm. Total Output Total Cost TFC TVC AFC AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40 $120 50 $180 60 $280 a. MC = ATC between 30 and 40 Quantity ATC at minimum between 20 and 40 Quantity b. MC = ATC at 30 Quantity ATC at minimum between 20 and 40 Quantity c. MC = ATC at 40 Quantity ATC at minimum between 20 and 40 Quantity d. MC = ATC between 30 and 40 Quantity ATC at minimum between30 and 40 Quantity e. MC = ATC between 20 and 40 Quantity ATC at minimum between 20 and 40 Quantitywhat are the inefficiencies of an imperfect competition ? what are the benefits of having a increasing competition accross varies sectors?
- Economists assume that by pursuing a strategy of cost minimization of production, most firms try to achieve profit maximization. Can you discuss minimization of cost of production by pursuing a long-run expansion path strategy, instead of a short-run path strategy, ceteris parabus? If you can use a graph that would help me understand thank youQUESTION 2 (a) Use the concepts of economies and diseconomies of scale to explain the shape of a firm’s long-run ATC curve. What is the concept of minimum efficient scale? What bearing can the shape of the long-run ATC curve have on the structure of an industry? (b) If a firm in monopoly maximizes revenue, does it automatically maximize profit too? Explain the content with relevant example and diagrams.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?
- 40) When a decrease in the scale of production leads to higher average costs, the industry exhibitsA) diminishing returns. B) decreasing returns to scale.C) constant returns to scale. D) increasing returns to scale.Explain why clear understanding of the environment within which it operates is important for business..In 2002 Boeing reduced employment by 33,000 workers due to reduced demand for aircraft. What does this decision reveal about how it viewed its marginal revenue product (MRP) and marginal resource cost (MRC)? Why didn’t Boeing reduce employment by more than 33,000 workers? By less than 33,000 workers?