Homework Answers
ATC for firm A = 75000/150000 = $.5
ATC for firm B = 120000/200000 = $.6
ATC for firm C = 146500/225000 = $.65
From the above calculations, it can be concluded that there is decreasing return to scale in the USB industry. It is concluded from the fact that with increase in output, the ATC is increasing in the industry. It makes the industry to have decreasing return to scale.
The shape of the ATC will be upward sloping with increase in output level in the industry.
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5. The table below comes from cost data from the long run total cost function. It shows the monthly output and tota...
(Click to select) economies of scale a. Long-run average total cost falls as the firm realize: rises when the firm...
(Click to select) economies of scale a. Long-run average total cost falls as the firm realize: rises when the firm experiences [ (Click to select) diseconomies of scale diminishing marginal returns increasing marginal returns b. The minimum efficient scale is the level of output produced by the smallest firm in the industry. smallest level of output at which a firm can produce. only level of output where long-run average total costs are minimized. smallest level of output needed to attain...
Consider the following table of long-run total cost for three different firms:
Consider the following table of long-run total cost for three different firms: Output (hypothetical units)1234567Firm "A" TC level$60$70$80$90$100$110$120Firm "B" TC level112439567596119Firm "C"' TC level2134496685106129Does each of these firms experience economies of scale or diseconomies of scale?
4) Suppose each firm's long run average cost curve, for positive levels of output, is given by AC 0.10.05Q+5/Q. The...
4) Suppose each firm's long run average cost curve, for positive levels of output, is given by AC 0.10.05Q+5/Q. The marginal cost curve is given by MC 0.+0.1Q. (a) Find the minimum efficient scale for the above cost function (b) What is the firm's minimum average cost? (c) Suppose you have many identical firms in a long run competitive equilibrium. Demand is P 13.1-0.040. What is the market quantity? How many firms are there? (d) Suppose demand increases to P...
Use the following information to answer questions 5-6. Consider the following table of long-run total cost...
Use the following information to answer questions 5-6. Consider the following table of long-run total cost for four different firms Quantity 1 Farm 1 $210 $340 $490 5660 $850 Fium 2 S180 55105660 $800 Fimm 3 $120 $250 $390 $700 Fimm 4 $150 $300 $450 $600 $750 $350 $1,060 $930 $870 $900 $1,290 $1,050 $1,050 $1,050 $540 5) Which firm has constant returns to scale over the entire range of output? a) Firm 1 b) Firm 2 c) Firm 3...
2. Table 4 below shows the total output, total revenue, total variable cost, and total fixed...
2. Table 4 below shows the total output, total revenue, total variable cost, and total fixed cost of a perfectly competitive firm. The market equilibrium price is not given explicitly but can be deduced from Table 4. Output lulewin Total revenue $1,500 $2,000 $3,000 $4,000 $5,000 Total variable cost $1,500 $2,000 $2,600 $3,900 $5,000 Total fixed cost $500 $500 $500 $500 $500 a. What level of output should the firm produce? Show your work. (15 points) b. Should it shut...
A firm has the following long-run total cost function: LTC = 3500Q - 450Q2 + 15Q3...
A firm has the following long-run total cost function: LTC = 3500Q - 450Q2 + 15Q3 a. Write the equation for the long-run average cost. b. Determine the minimum value of LAC. c. If the firm is a price taker, determine the minimum long-run price it must receive so that it will not exit the industry. d. Over what range of output will the firm have economies of scale?
Table 13-16 Listed in the table are the long-run total costs for three different firms. Output...
Table 13-16 Listed in the table are the long-run total costs for three different firms. Output Size 1 Unit 2 Units 3 Units 4 Units 5 Units Firm A $100 $110 $120 $130 $140 Firm B $100 $200 $300 $400 $500 Firm C $100 $300 $600 $1,000 $1,500 Refer to Table 13-16. Firm C is experiencing economies of scale. True False
Suppose each firm's long run average cost curve, for positive levels of output, is given by AC = 0.1 + 0.05Q + 5/Q....
Suppose each firm's long run average cost curve, for positive levels of output, is given by AC = 0.1 + 0.05Q + 5/Q. The marginal cost curve is given by MC = 0.1 + 0.1Q. (a) Find the minimum efficient scale for the above cost function. (b) What is the firm's minimum average cost? (c) Suppose you have many identical firms in a long run competitive equilibrium. Demand is P = 13.1-0.04Q. What is the market quantity? How many firms...
3. The following table gives the short-run and long-run total cost for various levels of output...
3. The following table gives the short-run and long-run total cost for various levels of output of Consolidated National Aeme, Inc. Q TC: TC TFC TVC AFC AVC MC 0 0 350 300 400 400 435 465 465 495 505 5 560 560 6 600 635 7 700 735 a. Which column, TCi or TC2, represents a long-run total cost, and which represents a short-run total cost? How do you know? b. For each level of output, find short-run TFC,...
QUESTION 30 A downward-sloping portion of a long-run average total cost curve is the result of:...
QUESTION 30 A downward-sloping portion of a long-run average total cost curve is the result of: economies of scale. diseconomies of scale. diminishing returns. the existence of fixed resources. 2.5 points QUESTION 31 In the long run, firms in many industries often experience a falling average total cost curve as a result of: gains through trade. increasing marginal returns. economies of scale. lower fixed costs. 2.5 points QUESTION 32 A large aircraft manufacturer, like Boeing, may have a...
(Click to select) economies of scale a. Long-run average total cost falls as the firm realize: rises when the firm experiences [ (Click to select) diseconomies of scale diminishing marginal returns increasing marginal returns b. The minimum efficient scale is the level of output produced by the smallest firm in the industry. smallest level of output at which a firm can produce. only level of output where long-run average total costs are minimized. smallest level of output needed to attain...
4) Suppose each firm's long run average cost curve, for positive levels of output, is given by AC 0.10.05Q+5/Q. The marginal cost curve is given by MC 0.+0.1Q. (a) Find the minimum efficient scale for the above cost function (b) What is the firm's minimum average cost? (c) Suppose you have many identical firms in a long run competitive equilibrium. Demand is P 13.1-0.040. What is the market quantity? How many firms are there? (d) Suppose demand increases to P...
Use the following information to answer questions 5-6. Consider the following table of long-run total cost for four different firms Quantity 1 Farm 1 $210 $340 $490 5660 $850 Fium 2 S180 55105660 $800 Fimm 3 $120 $250 $390 $700 Fimm 4 $150 $300 $450 $600 $750 $350 $1,060 $930 $870 $900 $1,290 $1,050 $1,050 $1,050 $540 5) Which firm has constant returns to scale over the entire range of output? a) Firm 1 b) Firm 2 c) Firm 3...
2. Table 4 below shows the total output, total revenue, total variable cost, and total fixed cost of a perfectly competitive firm. The market equilibrium price is not given explicitly but can be deduced from Table 4. Output lulewin Total revenue $1,500 $2,000 $3,000 $4,000 $5,000 Total variable cost $1,500 $2,000 $2,600 $3,900 $5,000 Total fixed cost $500 $500 $500 $500 $500 a. What level of output should the firm produce? Show your work. (15 points) b. Should it shut...
3. The following table gives the short-run and long-run total cost for various levels of output of Consolidated National Aeme, Inc. Q TC: TC TFC TVC AFC AVC MC 0 0 350 300 400 400 435 465 465 495 505 5 560 560 6 600 635 7 700 735 a. Which column, TCi or TC2, represents a long-run total cost, and which represents a short-run total cost? How do you know? b. For each level of output, find short-run TFC,...
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