Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 21, Problem 15QP
To determine
Explain why the firm produce its goods even after diminishing returns to scale.
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explain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is rising ?
Explain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is on the rise.
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.
Economics
Answer "False" or "True" each of the following. Justify by relying on graphical analysis whenever possible.
3.- If the marginal income is greater than the marginal cost, the competitive company will increase its profits by increasing its production (we assume increasing marginal costs).
4.- An industry in which the production process can be done with increasing economies of scale (for any level of production) cannot be one of perfect competition.
answer both asap thnx
Chapter 21 Solutions
Economics (MindTap Course List)
Ch. 21.2 - Prob. 1STCh. 21.2 - Prob. 2STCh. 21.2 - Prob. 3STCh. 21.2 - Prob. 4STCh. 21.3 - Prob. 1STCh. 21.3 - Prob. 2STCh. 21.3 - Prob. 3STCh. 21.4 - Prob. 1STCh. 21.4 - Prob. 2STCh. 21.4 - Prob. 3ST
Ch. 21.4 - Prob. 4STCh. 21.5 - Prob. 1STCh. 21.5 - Prob. 2STCh. 21.5 - Prob. 3STCh. 21 - Prob. 1QPCh. 21 - Prob. 2QPCh. 21 - Prob. 3QPCh. 21 - Prob. 4QPCh. 21 - Prob. 5QPCh. 21 - Prob. 6QPCh. 21 - Prob. 7QPCh. 21 - Prob. 8QPCh. 21 - Prob. 9QPCh. 21 - Prob. 10QPCh. 21 - Prob. 11QPCh. 21 - Prob. 12QPCh. 21 - Prob. 13QPCh. 21 - Prob. 14QPCh. 21 - Prob. 15QPCh. 21 - Prob. 16QPCh. 21 - Prob. 17QPCh. 21 - Prob. 18QPCh. 21 - Prob. 19QPCh. 21 - Prob. 1WNGCh. 21 - Prob. 2WNGCh. 21 - Prob. 3WNGCh. 21 - Prob. 4WNGCh. 21 - Prob. 5WNGCh. 21 - Prob. 6WNGCh. 21 - Prob. 7WNGCh. 21 - Prob. 8WNGCh. 21 - Prob. 9WNG
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- Define the Law of Diminishing Marginal Returns and giving a clear example, explain why this“Law” is important in Economics.arrow_forwardIn long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $9. Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. What is the firm's profit? (Please note that $360 and $180 are not the correct answers) $ ?arrow_forwardEvaluate the view that the main goal of firms will always be cost minimizationarrow_forward
- USE THE GRAPH TO ANSWER THE FOLLOWING QUESTIONS: (IF REQUIRED, USE THE DISCREET NUMBER OF BARRELS). ANSWERS IN WHOLE NUMBER a. How many barrels of natural-organic oil reflect the lowest minimum average variable cost?b. How much is the price of the natural-organic oil per barrel?c. How much is the fixed cost to produce the natural-organic oil?d. How many barrels of natural-organic oil should the firm produce to maximize its profit?e. At what production level would the marginal cost exceed the average cost?arrow_forwardFor each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? A stock market crash lowers people’s wealth. Batelco increases the prices of mobile services. Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?arrow_forwardWe expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. Why?arrow_forward
- What are transaction costs? How do transaction costs affect the boundaries of a firm?arrow_forwardWhen a firm's average total cost is at its minimum, what type of efficiency is achieved? A. Allocative efficiency B. Productive efficiency C. Dynamic efficiency D. Economic efficiencyarrow_forwardExplain the idea behind diminishing marginal returns and give a real-life example.arrow_forward
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