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 to the figure above. The minimum average total cost
to produce a quantity between QD and QF is achieved by using
technology ________.
a. 1
b. 2
c. 3
d. 4
24. 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 to the figure above. Between the output quantity QA
and QC, the long-run average total cost curve of the firm exhibits
________.
a. constant returns to scale
b. diminishing marginal product
c. diseconomies of scale
d. economies of scale
25. Consumer surplus is the ________.
a. difference between the buyer's reservation value and the price he actually pays
b. sum of a buyer's reservation value and the price he actually pays
c. product of a buyer's reservation value and the price he actually pays
d. ratio of a buyer's reservation value to the price he actually pays
Homework Answers
Answer 22- Option B
Average total cost is falling as the output rises.
Because of the economies of scale , the firm experiences the benefits of the reduced cost. So the Total cost reduces and hence the ATC also falls.
Marginal cost also decreases with the decreasing TC and the output increases . Hence the other options except B will not be applicable.
Answer 23 - Option D
ATC 4
Between Qd and Qf , the ATC 4 touches its minimum point.
ATC 1 , 2 , 3 do not touch their minimum points between Qd and Qf , hence they will not be the correct answer.
Answer 24 - Option C
Disconomies of scale
As we can see from the graphs the ATC is rising after the minimum point. Hence in the long run the firm will experience the diseconomies of scale rather than enjoying the cost benefits.
MC will be rising then , the output will be declining and not constant or increasing and there will be diseconomy and not the economy. Hence other options except C will be wrong.
Answer 25 - Option A
Difference between the buyers reservation value and the price he actually pays.
Consumer surplus is what the buyer is willing to pay is greater than the what the buyer actually pays. Hence he saves an amount .
The other options are not the definition of the consumer surplus. They have a wrong formula hence are wrong.
Add Answer to:
22. Which of the following is true for a firm that enjoys economies of scale? a. Marginal cost is increasing as output i...
D 22. Which of the following is true for a firm that enjoys economies of scale?...
D 22. Which of the following is true for a firm that enjoys economies of scale? Marginal cost is increasing as output increases. Average total cost is falling as output increases. Marginal cost is constant as output increases. Marginal revenue is falling as output increases.
8:587 18:26:20 Exit D 24. The figure below shows short-run average total cost curves for a...
8:587 18:26:20 Exit D 24. 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. Price ATC, ATC ATC Q, Q.QQQQQ Quantity Refer to the figure above. Between the output quantity QA and QC, the long-run average total cost curve of the firm exhibits constant returns to scale diminishing marginal product diseconomies of scale economies of scale
e total cost 19. For a certain firm, the 10th unit of output marginal cost of...
e total cost 19. For a certain firm, the 10th unit of output marginal cost of Sto. It follows that the production of the 10th it fo r of outputut the firm produse marinat revenue of land them the firm's profi not the 100th unit of t h e firm's average total costs C. Firm's profit-maximize ve futut is less than 100 units. d. production of the 101st unit of output the lost unit of output must increase the firm's...
8:55 1 18:24:19 Exit The figure below shows short-run average total cost curves for a firm...
8:55 1 18:24:19 Exit 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. Price ATC ATC ATC. Q.9, Q. QQQ Q Quantity Refer to the figure above. The minimum average total cost to produce a quantity between QD and QF is achieved by using technology
1. Toys Create Corp., produce puzzles and sell to consumers. A worker costs MYR 100 a day, and the firm has fixed costs of MYR 200. Workers Output Marginal Product Total Cost Average Total Cost Marginal Cost 0 0 --- --- --- 1 20
1. Toys Create Corp., produce puzzles and sell to consumers. A worker costs MYR 100 a day, and the firm has fixed costs of MYR 200. WorkersOutputMarginal ProductTotal CostAverage Total CostMarginal Cost00---------1202503904120514061507155a. Using the information above, calculate the marginal product, total cost, average total cost, and marginal cost. Identify the output level at minimum average total cost for Toys Create Corp. b. Construct the marginal-cost and average-total-cost curves for Toys Create Corp. Using your own words, explain diminishing marginal product and...
13. As output (plant size) increases, economies of scale occur when the A) long-run average cost...
13. As output (plant size) increases, economies of scale occur when the A) long-run average cost increases. B) long-run average cost decreases. C) short-run average total cost decreases. D) long-run average cost stays constant 14. Economies of scale can occur as a result of which of the following? A) increasing marginal costs as the firm increases its size B) higher fixed cost as the firm increases its size C) management difficulties as the firm increases its size D) greater specialization...
A firm encountering economies of scale over some range of output will have a: • rising...
A firm encountering economies of scale over some range of output will have a: • rising long-run average cost curve. • falling long-run average cost curve. • constant long-run average cost curve. • rising, then falling, then rising long-run average cost curve.
(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...
Which statements are true regarding economies of scale.
Which statements are true regarding economies of scale.A. To maximize profits, a monopoly that occurs because of economies of scale should produce an output so that marginal revenue equals marginal costs. B. Economies of scale typically cause an industry to be perfectly competitive. C. When a firm has a natural monopoly it has that type of monopoly because of economies of scale. D. A firm that has economies of scale sees its average total costs decrease when production increases.
Economies of scale refers to when: In the long run when average total cost does not...
Economies of scale refers to when:
In the long run when average total cost does not depend on the
quantity of output, this is called:
Commodities:
We assume that in the long run in a perfectly competitive
market:
Multiple Choice an increase in the quantity of output increases average total cost in the long run. None are correct. average total cost does not depend on the quantity of output in the long run. an increase in the quantity of output...
D 22. Which of the following is true for a firm that enjoys economies of scale? Marginal cost is increasing as output increases. Average total cost is falling as output increases. Marginal cost is constant as output increases. Marginal revenue is falling as output increases.
8:587 18:26:20 Exit D 24. 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. Price ATC, ATC ATC Q, Q.QQQQQ Quantity Refer to the figure above. Between the output quantity QA and QC, the long-run average total cost curve of the firm exhibits constant returns to scale diminishing marginal product diseconomies of scale economies of scale
e total cost 19. For a certain firm, the 10th unit of output marginal cost of Sto. It follows that the production of the 10th it fo r of outputut the firm produse marinat revenue of land them the firm's profi not the 100th unit of t h e firm's average total costs C. Firm's profit-maximize ve futut is less than 100 units. d. production of the 101st unit of output the lost unit of output must increase the firm's...
8:55 1 18:24:19 Exit 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. Price ATC ATC ATC. Q.9, Q. QQQ Q Quantity Refer to the figure above. The minimum average total cost to produce a quantity between QD and QF is achieved by using technology
13. As output (plant size) increases, economies of scale occur when the A) long-run average cost increases. B) long-run average cost decreases. C) short-run average total cost decreases. D) long-run average cost stays constant 14. Economies of scale can occur as a result of which of the following? A) increasing marginal costs as the firm increases its size B) higher fixed cost as the firm increases its size C) management difficulties as the firm increases its size D) greater specialization...
(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...
Economies of scale refers to when:
In the long run when average total cost does not depend on the
quantity of output, this is called:
Commodities:
We assume that in the long run in a perfectly competitive
market:
Multiple Choice an increase in the quantity of output increases average total cost in the long run. None are correct. average total cost does not depend on the quantity of output in the long run. an increase in the quantity of output...
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