Explain the following statement by using a graphical analysis: “The long-run average cost curve is the lower envelope of the firm’s short-run average cost curves.”

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: When the marginal product curve is downward sloping, the average product curve? 1. might be either…

A: Average product curve indicates the per unit output at each level of input variable. MP indicates…

Q: Choose all answers that are correct:  the marginal cost is the slope of the... a. The variable cost…

A: Marginal cost = Change in total cost / Change in quantity of output

Q: Explain the difference between fixed costs, sunk costs and variable costs. Provide an example that…

A: The total cost refers to the market value of inputs used by the firm in the production of goods and…

Q: Specific subject: Microeconomics - Production and Costs Function  Comment on the following…

A: The cost that the firm incurs to produce one additional unit of the output is known as the marginal…

Q: Jane's Juice Bar has the following cost schedules: In the following table, complete the marginal…

A: Total cost is the total expenditure done by the producer on the production process. Total cost…

Q: The marginal cost curve intersects the average total cost curve at the level of output where average…

A: Marginal Cost (MC): Marginal cost occurs when producing an extra unit of output. Average total cost…

Q: Write a short note on Law of diminishing returns – implications for the short-run cost curve

A: Law of diminishing return to scale implies that as the number of a variable input is raised keeping…

Q: "Whenever a number which is less than the previous average of a total is added to that total, the…

A: In a market, it can be seen that the different cost curves are directly or indirectly related to…

Q: Assume that for a quantity produced of 20, the total cost is 500 and the average fixed cost is 10.…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: Explain and identify the relationship between total cost, average cost and marginal cost using…

A: Total cost is defined as the total expenses that a company or firm has to incur in order to produce…

Q: The average fixed cost curve will never intersect with either the horizontal or vertical axis. There…

A: Hey, Thank you for the question. According to our policy we can only answer up to 3 sub parts per…

Q: In short-run production where labor is a variable input, the relationship between marginal product…

A: We are given, Economy is in short run. Labor is the variable input. Marginal cost of production =…

Q: The set of lines below reflect information about the cost structure of a firm. Use the figure to…

A: In a market,  a firm's cost curves helps to analyze its production efficiency at different output…

Q: What are a total variable cost and average variable cost?

A: Total Variable costs are those costs that change when the input changes. For example-wages, when…

Q: Give two examples of variable costs

A: Variable costs are those costs which vary with the production level and thus gets changed as the…

Q: In the given figure, short-run cost curves are depicted. What role does the graph's Curve Y…

A: "Cost curves in economics represents a graph of the costs involved in the production process as a…

Q: How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant,…

A: Here, an improvement in the technology used, would decrease the cost and will shift the cost curve…

Q: What is the typical shape of the average fixed cost curve, Why is it shaped this way. Graphically…

A: Average Fixed Cost (AFC) is the cost that must be incurred in fixed quantity regardless of the level…

Q: Q50 The point of tangency between the short-run average total cost (SRATC) curve and the long-run…

A: Answer: The long-run average total cost curve is tangent to the minimum points of the short-run…

Q: Compute the long-run costs in the following table. The price per unit of capital is $50 and per unit…

A: Given: Price per unit of capital=$50 Price per unit of labor=$30 The durable goods that are being…

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: briefly explain returns to scale.  Explain the variable costs in the cost function

A: returns to scale allude to the rate by which result/output changes on the off chance that all…

Q: Please help me to answer Q8

A: Question 8:Marginal Cost: It refers to the additional cost incurred when one more unit of a good is…

Q: The following table describes the various least cost combinations of two inputs from various…

A: Iso quant shows the different possibil combinations of inputs that give same level of output . And…

Q: Using the numbers representing short run costs in the chart below, calculate the number that belongs…

A: Total fixed cost is the addition of fixed cost and variable cost. Fixed cost is cost which remains…

Q: The following graph shows the short-run average total cost curves for different plant sizes and the…

A: In the long run firm chooses to operate at a level where long run average cost is minimized.

Q: What is the relationship between marginal product and marginal cost? Why do you suppose that is? Is…

A: Marginal Product: The term marginal product refers to the increase in total product due to the use…

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: Graph the following:  Average Total Cost curve and Average Variable Cost curve with proper…

A: Average total cost refers to per unit cost of production which is calculated by dividing total cost…

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: 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: Comment on the following statement: "Average cost includes both fixed and variable costs, whereas…

A: Average Cost= Total Cost/Output Total Cost=Total Fixed Cost+Total Variable cost Marginal cost=Change…

Q: Show the relationship between short-run marginal and average cost curves, and long-run marginal and…

A: In the short run there are two types of costs:- fixed costs and variable costs. In the short run…

Q: Consider the following types of firms. For each one, the long-run average cost curve eventually…

A: Diseconomies of scale occur when a corporation or business expands to the point where its costs per…

Q: Explain which of the following is a fixed cost or a variable cost for General Motors. a. The cost…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Refer to the table below. How will the marginal cost curve look like if you draw it? Units of…

A: MC = change in TC / change in units With MC remains constant with increase in output, MC curve is…

Q: Superconductor technology is becoming a widespread and indispensible component of the machines we…

A: The Long-run average cost curve is defined as a curve which portrays a firms lowest cost per unit at…

Q: (c) Long-run average total cost curve is a curve that shows the lowest (Unit) cost at which the firm…

A: When a fixed cost is set to minimize average total cost for each level of production, the long-run…

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: Distinguish between economies of scale and constant returns to scale. What shape will the long-run…

A: Economies of scale – A downward sloping LARC (Long run average cost curve)The constant return to…

Q: Quantity Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost…

A: Total cost is the cost incurred on the production of the goods. Total cost includes Total variable…

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.