MC AFC AC AVC Quantity Refer to the diagram above. Based on the information illustrated in the graph, which of the following is correct? A. producing a marginal unit is reducing average costs overall B. the marginal cost of production for producing an additional unit is below the cost for producing the earlier units C. the transition point between where MC is pulling down and pulling up AC always occurs at the minimum point of the AC curve D. low marginal costs first pull up the overall average costs

MC AFC AC AVC Quantity Refer to the diagram above. Based on the information illustrated in the graph, which of the following is correct? A. producing a marginal unit is reducing average costs overall B. the marginal cost of production for producing an additional unit is below the cost for producing the earlier units C. the transition point between where MC is pulling down and pulling up AC always occurs at the minimum point of the AC curve D. low marginal costs first pull up the overall average costs

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 33CTQ: Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then...

See similar textbooks

Similar questions

In choosing a production technology, how will firms react if one input becomes relatively more expensive?
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
How does fixed cost affect marginal cost? Why is this relationship important?
What is die difference between accounting and economic profit?
What is the relationship between marginal product and marginal cost? (Hint: Look at the curves.) Why do you suppose that is? Is this relationship the same in the long run as in the short run?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?