EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 7, Problem 10RQ
To determine
To explain:Reason for rise in the price of input and its impact on AC curve amd MC curve.
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The phrase “returns to scale” is a way of describing the change in output that is produced as a result of a relative change in inputs used.
Which of the following statements is true?
If inputs are doubled and output doubles, this is called increasing returns to scale.
If inputs are doubled and output doubles, this is called constant returns to scale.
If inputs are tripled and output doubles, this is called increasing returns to scale.
If inputs are doubled and output doubles, this is called decreasing returns to scale.
If inputs are tripled and output doubles, this is called constant returns to scale
Explain why an increase in the price of an input must typically cause an increase in the long-run total cost of producing any particular level of output.
Suppose that a firm that produces face masks is in a long-run equilibrium setting where it has 3 units of capital and 3 units of labor, and where MRTS = w/r. Then suddenly in March 2020, the price of face masks increases due to increasing demand:
In a graph with capital on the y-axis and labor on the x-axis, graph how the increase in price will change the firm’s input choices (labor and capital) in the short-run (when only labor can adjust). Will the new choice of inputs be on the expansion path?
Suppose that entry into the face mask production industry is very costly. In the same graph, graph how the increase in price will change the firm’s input choices in the long-run (when both labor and capital can adjust). Will the new choice of inputs be on the expansion path?
Now suppose that entry into the face mask industry is free and that this is a constant cost industry. What will happen to price in the long run? How will the firm’s input choices (labor and capital) change in the…
Chapter 7 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 7.1 - Prob. 1MQCh. 7.1 - Prob. 2MQCh. 7.1 - Prob. 1TTACh. 7.1 - Prob. 2TTACh. 7.2 - Prob. 1MQCh. 7.2 - Prob. 2MQCh. 7.2 - Prob. 1TTACh. 7.2 - Prob. 2TTACh. 7.3 - Prob. 1MQCh. 7.3 - Prob. 2MQ
Ch. 7.3 - Prob. 3MQCh. 7.3 - Prob. 1TTACh. 7.3 - Prob. 2TTACh. 7.5 - Prob. 1TTACh. 7.5 - Prob. 2TTACh. 7.6 - Prob. 1MQCh. 7.6 - Prob. 2MQCh. 7.6 - Prob. 3MQCh. 7.6 - Prob. 1.1MQCh. 7.6 - Prob. 2.1MQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQCh. 7 - Prob. 7.1PCh. 7 - Prob. 7.2PCh. 7 - Prob. 7.3PCh. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Prob. 7.8PCh. 7 - Prob. 7.9PCh. 7 - Prob. 7.10P
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