Principles of Microeconomics (12th Edition)
12th Edition
ISBN: 9780134081199
Author: CASE
Publisher: PEARSON
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Question
Chapter 9.A, Problem 2P
To determine
External diseconomies of scale.
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Students have asked these similar questions
When an MNC restructures its operations to reduce its economic exposure, it may sometimes forgo economies of scale. Explain.
When Firm X doubled its output, it was found that its cost per unit declined by 10 percent. It can be concluded that
a. the firm was operating on the inelastic portion of the demand curve
b. the firm was facing external scale diseconomies.
c. the marginal cost of production at the initial output level was constant.
d. the firm was enjoying internal scale economies.
. An electricity producer has a constant marginal cost of production
equal to $40 per megawatt. The residual demand for its electricity
is given by P (q) = a−bq, where P is the price and q is the quantity of
power generated by this producer. The producer knows the slope,
b, but he vertical intercept of the residual demand curve, a
is unknown. Assume A and B are greater than zero. If you get stuck,
you may answer any of the following questions for special case where a = 80
And b = 0.5 for partial credit.
(a) What is the marginal revenue, M R(q), for this producer?
b) What is the optimal q for this producer?
(c) What is the electricity producer’s optimal price?
(d) What is the electricity producer’s optimal bid in a uniform price
Auction?
e) Suppose b is equal to zero. Would the producer have an incentive
to submit a bid above its marginal cost? Explain.
Chapter 9 Solutions
Principles of Microeconomics (12th Edition)
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Similar questions
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- Consider the following model of a firm. The firm can sell any number of units at the constant price, p. The marginal production is given by MC=c+dq. What will the price be when profit is maximised? a. dq-c b. c-dq c. p d. cq-darrow_forwardConsider the three-sector model Y = C + I C = aYd+ b T = tY + T * I = cr + d i) Show that Y = b + d- aT* + cr/1-a(1-t) If a = 0.8, b = 100, t = 0.25, T * = 250, c = -60, d = 1700 & r = 8, calculate the equilibrium level of income. (b)(i) Find the marginal cost of a firm’s different products when the total cost function is c = 5x2+ 7x + 2.5xy + 6 y + 3y2 (ii)Determine the marginal cost of y when x = 3, y = 5arrow_forwardWhich returns to scale will an efficient firm choose? What market structure has no loss in long run? What production function shows the maximum quantity of goods or services that can be produced with a set of inputs assuming one of the inputs used remains unchanged? Capacity planning refers to adjustment in production considering the what? What can destroy monopoly position?arrow_forward
- At the profit maximizing level of input use, Which of the following are true? (i) MVP=0 (ii) MVP=MIC (iii) MPP=MVP (iv) MVP=MVICarrow_forwardA firm has access to two production processes with the following marginal cost curves: MC1 = 0.25x and MC2 = 6+0.1y, where output in production process 1 is x, output in production process 2 is y and hence total output produced is Q = x+y. Show your work to answer the following questions. (i) If it wants to produce 20 units of output, how much should it produce with each process? (ii) If it wants to produce 38 units of output, how much should it produce with each process? (iii) If it wants to produce 108 units of output, how much should it produce with each process?arrow_forward
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