Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 7, Problem 5SQ
To determine
The implication of lower
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Q1. If fixed cost (FC) is $50, variable cost (VC) is $100, and output (quantity) is 3, what is average total cost (ATC)?
Q2. When a company triples all of its inputs, its Longrun Average Cost (LAC) goes up. The firm has economies of scale or diseconomies of scale?
at does the Long Run Average Cost curve depict?
a) It depicts the relationship between Average (Total) Cost and quantity produced when at least one input is fixed
b) It depicts the relationship between Average (Total) Cost and the scale of operation in the long run
c) Both a) and b) are true
d) Neither a) nor b) is true
Read the question and given information carefully. Show all necessary steps and reasoning that lead to the answers. You nead to draw graphs.
a-Define diseconomies of scale and draw the long run average cost curve of a company that demonstrates diseconomies of scale
b-List 2 reasons of diseconomies of scale and (in no more than 50 words for each reason) explain how each reason can contribute to diseconomies of scale
Chapter 7 Solutions
Micro Economics For Today
Ch. 7.5 - Prob. 1YTECh. 7 - Prob. 1SQPCh. 7 - Prob. 2SQPCh. 7 - Prob. 3SQPCh. 7 - Prob. 4SQPCh. 7 - Prob. 5SQPCh. 7 - Prob. 6SQPCh. 7 - Prob. 7SQPCh. 7 - Prob. 8SQPCh. 7 - Prob. 9SQP
Ch. 7 - Prob. 10SQPCh. 7 - Prob. 11SQPCh. 7 - Prob. 1SQCh. 7 - Prob. 2SQCh. 7 - Prob. 3SQCh. 7 - Prob. 4SQCh. 7 - Prob. 5SQCh. 7 - Prob. 6SQCh. 7 - Prob. 7SQCh. 7 - Prob. 8SQCh. 7 - Prob. 9SQCh. 7 - Prob. 10SQCh. 7 - Prob. 11SQCh. 7 - Prob. 12SQCh. 7 - Prob. 13SQCh. 7 - Prob. 14SQCh. 7 - Prob. 15SQCh. 7 - Prob. 16SQCh. 7 - Prob. 17SQCh. 7 - Prob. 18SQCh. 7 - Prob. 19SQCh. 7 - Prob. 20SQCh. 7 - Prob. 21SQCh. 7 - Prob. 22SQCh. 7 - Prob. 23SQCh. 7 - Prob. 24SQCh. 7 - Prob. 25SQ
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- Question Costs in the short run versus in the long run What I really need help is to calculate the LRACT. I don't know how to do it. Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: QQ equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) QQ = 100 QQ = 200 QQ = 300 QQ = 400 QQ = 500 QQ = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike’s Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost is Blank per bike. Suppose Ike’s Bikes is expecting to produce 600 bikes per month for…arrow_forwardThe short run average variable cost curve Explain answer a. Is always downward-sloping b. Starts at the origin C. Starts above the origin and always slopes upward d. Is a horizontal line intersecting the vertical axis e. Slopes downward at low rates out output, then slopes upward at higher rates of outputarrow_forwardCost curves. a) Why does the difference between AVC and ATC get smaller as Q increases? b) Why does MC intersect AVC and ATC at their minimum points? c) Explain the difference between the short run and the long run. d) What is meant by “economies of scale”? (Hint: it has to do with long run average cost) e) Give an example of economies of scale and explain.arrow_forward
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