Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
Question
Chapter 7, Problem 1MC
To determine

Economies of scope.

Expert Solution & Answer
Check Mark

Explanation of Solution

The cost of producing these two goods together is less than the total cost incurred for producing these two goods separately. Thus, option ‘c’ is correct.

Economics Concept Introduction

Economies of scope: Economies of scope refers to a situation where the total cost of production decreases if two or more number of goods are produced together rather than being produced separately.

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Students have asked these similar questions
FindĀ TC, MC, AFC, AVC,Ā andĀ ATCĀ from the following table.Instructions:Ā Enter your responses rounded to two decimal places.Ā  Units (Q) FC($) VC($) TC($) MC($) AFC($) AVC($) ATC($) 0 100 0 Ā  ā€” ā€” ā€” ā€” 1 100 40 Ā  Ā  Ā  Ā  Ā  2 100 60 Ā  Ā  Ā  Ā  Ā  3 100 70 Ā  Ā  Ā  Ā  Ā  4 100 85 Ā  Ā  Ā  Ā  Ā  5 100 130 Ā  Ā  Ā  Ā  Ā  (Note:Ā Marginal costs should be interpreted as between levels of output.)
Three college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the stu- dent recreation center, which pay $6,000 per year. A fully equipped facility can be leased at a cost of $8,000 per year. Additional costs are $1,000 a year a. What are fixed costs?b. What are variable costs? c. What is the marginal cost?
Three college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the student recreation center, which pays $6,000 per year. A fully equipped facility can be leased at a cost of $8,000 per year. Additional costs are $1,000 a year for insurance and $.50 per person per hour for materials and supplies. Their services would be priced at $10 per hour per person. a. What are fixed costs? b. What are variable costs? c. What is the marginal cost? d. How many student hours would it take to break even ?
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