You overheard Mr. John, the newly-hired marketing manager, saying: “I think our company should take advantage of economies of scale by increasing output, thereby spreading out our overhead fixed costs”. Would you agree with this statement? If not, provide a better description for “economies of scale”. Explain how they may be achieved by organizations. Highlight what would prevent them to occur.

Q: How and why does a firm’s average-total cost curve differ in the short run compared with the long…

A: In the long run, a firm adjusts the different factors of production that are fixed in comparison in…

Q: Define economies of scale and explain why they might arise. Define diseconomies of scale and explain…

A: Economies of Scale: Reduction of average and marginal costs in the long run due to an increase of a…

Q: Refer to the Long Run Average Total Cost curve below to answer the following questions:

A: Economies of scale occurs when LRAC decreases as output increases. In the given curve, LRAC…

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

A: Constant Returns to scale refers to the situation where with the change in the production, the cost…

Q: Explain two reasons due to which economies of scale may arise. Write your answer within 40 words.…

A: Economies of scale refer to the cost advantage of the firms when they increase production. Economies…

Q: Which of the following can we conclude when production has economies of scale? Marginal cost…

A: please find the answer below.

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

A: Economies of scale means reducing production cost by increasing output at a large scale.

Q: Explain the difference between increasing returns to scale and economies of scale. In what way are…

A: The aim of any firm to maximize the profits.  To maximize the profits firm has to increase the…

Q: A hospital provides emergency-room medical care for local residents. Suppose the hospital currently…

A: Given:  Suppose the hospital provides care for  Patients: 15000 Total Cost = $60,000,000   If…

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

A: The expenses that are being incurred for carrying out transactions of the business are known as…

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: Suppose an automobile manufacturer is choosing between two production options. It can produce 100…

A:

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: Define the economies and diseconomies of scale and depict graphically how they relate to the long…

A: There are three types of returns to scale- Economies of scale The constant return to scale…

Q: Q47 In the long run, the law of diminishing marginal returns... a. Sometimes holds, depending on…

A: Option E Law of diminishing marginal returns shows that when an additional unit of production is…

Q: Suppose that the Law of Diminishing Returns sets in immediately (that is, there is no range of…

A:

Q: How could you explain the difference between economies of scope and economies of scale?

A: Economies of scope and scale are concepts that relate to the cost of production of firms.  Economies…

Q: Average cost decrease indefinitely as output expands.   Is that true?

A: Economies of scale signifies a scenario where a firm reaps the cost benefits while carrying out…

Q: Some individuals decry the decline of the small family farm and its replacement with the huge…

A: The situation of reducing the total cost during the process of increasing production is referred to…

Q: [How does the impact of fixed costs change production decisions in the short run and in the long…

A: An increase (decrease) in fixed cost does not change MC or AVC, but increases (decreases) AFC, which…

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: 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: the following table to answer the next question.   Output           Total Cost      0…

A: Total cost is the sum of fixed cost and variable cost.

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: Which of the following would be a source of economies of scale? the quantity of labour more…

A: Marginal cost is the additional cost incurred in order to produce an additional unit of output thus…

Q: Assume a company is producing 600 units of output per day and minimizing total cost with the…

A: Short-run marginal cost is the adjustment of complete cost when an extra result is delivered in the…

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

A: Economies of scale provides cost advantage to the firm.Firm is able to lower average cost through…

Q: Use economies of scale to link a firm’s size and its average costs in the long run.

A: Economies of scale refers to a situation when the average cost of production falls with higher level…

Q: If a production function exhibits decreasing returns to scale, then the average variable costs are…

A: ANSWER STEP-1 If A Production Function Exhibits Decreasing Returns To Scale, Then The Average…

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: Assume a company is producing 600 units of output per day and minimizing total cost with the…

A: The short run refers to the period of time when the quantity of at least one of the input is fixed…

Q: What are the advantages of internal economies of scale? Explain them briefly

A: Economies of scale occur when there is a decline in the average cost of production as more and more…

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: 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: Distinguish between economies of scale and diseconomies of scale. Give examples of why a firm may…

A: The long-run average total cost curve declines because apparently, the firm becomes efficient in…

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: 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: A firm hires two workers and rents 15 acres of land for a season. It produces 150,000 bushels of…

A: Returns to scale state the effect on the output level due to the increase in the production inputs.