Use the information in the table below to answer the following questions2.Average TotalCostAverage FixedAverageQuantityMarginal CostCostVariable Cost$ 20.00$ 20.00$ 18.00$ 60.00$ 39.00$ 36.67S40.0020.00219.00$S32.0013.3323.33$ 30.00$40.00$ 50.00410.00$ 46.00$ 53.33$ 60.00$70.0058.0038.00$ 90.00$66.6746.67$ 54.29S$100.0075.71

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Asked Nov 15, 2019
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Question: Looking at the average total cost data, at what level of output does the diminishing returns effect begin to dominate the spreading effect? Explain.

Use the information in the table below to answer the following questions
2.
Average Total
Cost
Average Fixed
Average
Quantity
Marginal Cost
Cost
Variable Cost
$ 20.00
$ 20.00
$ 18.00
$ 60.00
$ 39.00
$ 36.67
S
40.00
20.00
2
19.00
$
S
32.00
13.33
23.33
$ 30.00
$
40.00
$ 50.00
4
10.00
$ 46.00
$ 53.33
$ 60.00
$
70.00
5
8.00
38.00
$ 90.00
$
6
6.67
46.67
$ 54.29
S
$100.00
7
5.71
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Use the information in the table below to answer the following questions 2. Average Total Cost Average Fixed Average Quantity Marginal Cost Cost Variable Cost $ 20.00 $ 20.00 $ 18.00 $ 60.00 $ 39.00 $ 36.67 S 40.00 20.00 2 19.00 $ S 32.00 13.33 23.33 $ 30.00 $ 40.00 $ 50.00 4 10.00 $ 46.00 $ 53.33 $ 60.00 $ 70.00 5 8.00 38.00 $ 90.00 $ 6 6.67 46.67 $ 54.29 S $100.00 7 5.71

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Expert Answer

Step 1

The spreading effect is the effect which the increasing output has on the average total cost. As the output increases in production, the greater will be the quantity of output over which the fixed cost is spread. As a result of the higher output on which the fixed cost is spread, there will be a lower average fixed cost in the economy. This effect of increased output on the fixed cost is known as the spreading effect.

Step 2

The diminishing returns to scale are the opposite effect that the increasing output has on the average total cost. In the diminishing returns to scale, as the variable inputs are increased in order to increase the outp...

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Cost of production

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