When economies of scale are present cost per unit declines as output expands. This is because when a firm enjoys economies of scale then it can double the output for less than doubling the cost. In this situation increasing the production level leads to decline in the long-term average costs of the firm.
Question 28 When economies of scale are present cost per unit declines as output expands the...
Question 3-4 SESSION 13 The marginal revenue is the rate of change in total revenue per unit increase in output, Q The marginal cost is the rate of change in total cost per unit increase in output, Q AR is defined as average revenue per unit for the first Q su ccessive units sold. AR is determined by dividing total reven ue by the quantity sold, Q The AR function is equal to price, P. where Pis given by the...
28 When there are external economies of scale, an increase in the size of the market will: A) not affect the number of firms, but will lower the price per unit. B) decrease the number of firms and lower the price per unit. C) decrease the number of firms and raise the price per unit. D) increase the number of firms and raise the price per unit. E) increase the number of firms and lower the price per unit. -...
International trade ar 36 Internal economies of scale will by average cost when output is Pr A) increase; increas ed; a firm B) reduce; increased; the industry C) increase; increased; the industry D) reduce; reduce; the industry E) reduce; increased; a firm and 37 The learning curve describes the A) direct; unit cost; cumulative output B) inverse; educ ation; annual income C) inverse; unit cost; cumulative output D) direct; education; annual income E) direct; education; labor productivity , relationship between...
In the graph below, economies of scale are present at Long-Run Average Cost Curve Long-Run Average Cost ($) A B D E Quantity of Output Point C Point B Point D Point A All of these answers are correct. If the firm described in the table below operates in a perfectly competitive market and the price is $15, what is the profit-maximizing level of output for the firm? Quantity of Camping Chairs 0 Total Cost ($) 7 - 21 2...
Exhibit 7-17 Marginal revenue and cost per unit curves DMC ATC Price and costs per unit (dollars) AVC 0 20 100 40 60 80 Quantity of output (units per day) 16. As shown in Exhibit 7-17, the price at which the firm earns zero economic profit in the short-runis a. $10 per unit. b. $15 per unit. c. $40 per unit. d. more than $20 per unit. e. $20 per unit. 17. In long-run equilibrium, the typical perfectly competitive firm...
22. Which of the following is true for a firm that enjoys economies of scale? a. Marginal cost is increasing as output increases. b. Average total cost is falling as output increases. c. Marginal cost is constant as output increases. d. Marginal revenue is falling as output increases. 23. The figure below shows short-run average total cost curves for a firm under four different production technologies. Assume that there are only four different technologies that the firm could use. Refer...
28. Firms will continue to enter a competitive industry until, in the LR, a. firms are making a fair rate of return b. the supply curve is meaningless c. all economic profits have been competed away d. (a) and (c) above are both correct 30. When positive externalities exist in a competitive market, the competitive output will be larger than QSO. True or False? 31. One reason economists object to monopoly is a. monopolies overproduce...
ID: A 9. When a monopolist is able to sell its product at different prices, it is engaging in a quality adjusted pricing. b. price differentiation. c. price discrimination. d. distribution pricing. 10. A natural monopoly occurs when a. the product is sold in its natural state (such as water or diamonds). b. there are economies of scale over the relevant range of output. c. the firm is characterized by a rising marginal cost curve. d. production requires the use...
Question 82 Not yet answered Points out of 1.oo Remove flag Scenario 14-2 Assume a certain firm is producing Q 1,000 units of output. At Q 1,000, the firm's marginal cost equals S20 and its average total cost equals $25. The firm sells its output for S30 per unit. Refer to Scenario 14-2. To maximize its profit, the firm should Select one: a. shut down. b. decrease its output but continue to produce. C. increase its output. O d. continue...
c) The demand function for books in Pick n Pay is given by P quantity demanded and P is the price per book. 50-0.3Q, where Q is the i. Find the number of books that will be bought when the price is K2. ii. iii. Find the price elasticity of the demand when the number of books bought is 30. ] Calculate the percentage change in quantity demanded when the price increases by 10% (use the coefficient price elasticity of...