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Bundle: Microeconomics, 13th + Aplia, 1 Term Printed Access Card
13th Edition
ISBN: 9781337742535
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 8, Problem 16QP
To determine
Explain the cost advantage of large firm over the small firm.
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Students have asked these similar questions
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.
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.
9. Firm's Cost Schedule
Jane's Juice Bar has the following cost schedules:
In the following table, complete the marginal cost, average variable cost, and average total cost columns.
Average Total Cost
(Dollars)
Quantity
Variable Cost
Total Cost
Marginal Cost
Average Variable Cost
(Vats of juice)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
30
1
35
2
15
45
3
30
60
4
50
80
5
75
105
6
105
135
Chapter 8 Solutions
Bundle: Microeconomics, 13th + Aplia, 1 Term Printed Access Card
Ch. 8.2 - Prob. 1STCh. 8.2 - Prob. 2STCh. 8.2 - Prob. 3STCh. 8.2 - Prob. 4STCh. 8.3 - Prob. 1STCh. 8.3 - Prob. 2STCh. 8.3 - Prob. 3STCh. 8.4 - Prob. 1STCh. 8.4 - Prob. 2STCh. 8.4 - Prob. 3ST
Ch. 8.4 - Prob. 4STCh. 8.5 - Prob. 1STCh. 8.5 - Prob. 2STCh. 8.5 - Prob. 3STCh. 8 - Prob. 1QPCh. 8 - Prob. 2QPCh. 8 - Prob. 3QPCh. 8 - Prob. 4QPCh. 8 - Prob. 5QPCh. 8 - Prob. 6QPCh. 8 - Prob. 7QPCh. 8 - Prob. 8QPCh. 8 - Prob. 9QPCh. 8 - Prob. 10QPCh. 8 - Prob. 11QPCh. 8 - Prob. 12QPCh. 8 - Prob. 13QPCh. 8 - Prob. 14QPCh. 8 - Prob. 15QPCh. 8 - Prob. 16QPCh. 8 - Prob. 17QPCh. 8 - Prob. 18QPCh. 8 - Prob. 19QPCh. 8 - Prob. 1WNGCh. 8 - Prob. 2WNGCh. 8 - Prob. 3WNGCh. 8 - Prob. 4WNGCh. 8 - Prob. 5WNGCh. 8 - Prob. 6WNGCh. 8 - Prob. 7WNGCh. 8 - Prob. 8WNGCh. 8 - Prob. 9WNG
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Similar questions
- Jane's Juice Bar has the following cost schedules: In the following table, complete the marginal cost, average variable cost, and average total cost columns. Quantity Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost (Vats of juice) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 30 1 38 18 48 30 60 4 50 80 5 80 110 120 150arrow_forwardExplain how a decrease in input prices or an increase in efficiency would affect costs.arrow_forwardWhat are the advantages of internal economies of scale ? Explain shortly.arrow_forward
- A firm has a fixed production cost of $4000. For the first 100 units of production, the firm has a marginal cost of $50 per unit produced. Producing more than 100 units has a marginal cost of $70 per unit produced. The firm cannot produce more than 150 units. How much does it cost to produce at q=0? at q=50? at q=100? at q=125? at q=150? Graph the firm’s marginal cost functionarrow_forwardWhich of the following would be the best starting point on which to focus if an air conditioner manufacturer wants to look at its total costs of production in the short run? Divide the variable costs of production by the quantity of output. Divide the total costs of production by the quantity of output. Divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be. Divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be.arrow_forwardWhere average costs of production are lowest when all output is produced by a single firm.arrow_forward
- At a company meeting, someone suggests that Samsung would be better off if it uses its resources to manufacture 25 million phones and 1.75 million tablets. As one of Samsung's analysts, how do you explain the feasibility of the suggestion to the other team members in your company?arrow_forwardWhy will firms in most markets be located at or close to the bottom of the long-run average cost curve?arrow_forwardYour average total cost is $30; the price you receive for the good is $15. Should you keep on producing the good? Why? You should produce in the long run as long as you are only earning small economic losses. It is always possible to make up a small loss. Maybe. It depends on whether you are covering average variable costs in the long run. You should not produce in the long run because you are earning an economic loss. All inputs are variable in the long run so you can go out of business. You should continue producing in the long run because you are earning an economic profit.arrow_forward
- For an increase in output, average costs change by more in the short run than in the long run, but for a decrease in output, the opposite is true. Explain why the above statement is True, False, or Uncertain according to economic principles.arrow_forwardDuring a coffee-room debate among several young MBAs who had recently graduated, one of the young executives flatly stated, “The most this company can lose on its Brazilian division is the amount it has invested (its fixed costs).” Not everyone agreed with this statement. In what sense is this statement correct? Under what circumstances could it be false? Explain.arrow_forwardConsider the table below that describes the costs associated with producing a good (Q). Q Total Variable Cost Total Cost 0 0 30 1 30 60 2 50 80 3 65 95 4 77 107 5 87 117 6 100 130 7 120 150 8 160 190 9 220 250 10 300 330 What is the value of the average total cost when Q=2? Enter your answer as a number below. Do not include a "$" sign.arrow_forward
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