Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - . If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 - . Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3-is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises - relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).
Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - . If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 - . Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3-is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises - relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 38CTQ: Do you think that the taxicab industry in large cities would be subject to significant economies of...
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