ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- What is a sunk cost? Provide an example of a sunk cost other than one from this book. Why are such costs irrelevant in making decisions about future actions?arrow_forwardDiscuss whether economies of scale have any relevance to such companies as Wal-Mart.arrow_forwardYou produce widgets. Currently you produce four widgets at a total cost of $40. What is your average total cost? Suppose you could produce one more (the fifth) widget at a marginal cost of $5. If you do produce that fifth widget, what will your average total cost be? Has your average total cost increased or decreased? Why? Suppose instead that you could produce one more (the fifth) widget at a marginal cost of $20. If you do produce that fifth widget, what will your average total cost be? Has your average total cost increased or decreased? Why?arrow_forward
- Would you please tell me how the economies of scale can spread out the cost of production, so that the average cost of each product is reduced?arrow_forwardSuppose the United Kingdom produces only two goods: alfalfa and smartphones. The following graph shows the United Kingdom's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. 100 PPF 40 20 D E 20 40 60 80 100 ALFALFA (Millions of bushels) SMARTPHONES (Millions) 7arrow_forwardGraphically, the marginal cost curve and the average total cost curve intersect wherearrow_forward
- After running a successful pineapple business, Diddy looks for a new business venture. Now he wants to run gold mining business named "Diddy Bling Bling" which produces/sells raw gold. For simplicity, two types of inputs are required to produce raw gold (workers and gold mine). In short- run production, the size of gold mine is fixed while the number or workers can vary. After consulting his business consultant, Diddy computes the following cost table. The quantity of raw gold (kilograms) Averaged Total Cost (gold mine size=small) Averaged Total Cost (gold mine size-medium) Averaged Total Cost (gold mine size-Large) 1 700 1400 1800 2 600 1300 1700 3 500 1200 1600 4 400 1100 1500 5 300 1000 1400 6 400 900 1300 7 500 800 1200 8 610 600 1100 9 700 500 1000 10 800 400 900 11 900 375 800 12 1100 250 700 13 1200 400 600 14 1300 490 500 15 1400 600 400 16 1500 700 350 17 1600 800 300 18 1700 900 350 19 1800 1000 400 20 1900 1100 500 21 2000 1200 600 22 2100 1300 700 Draw Diddy Bling Bling's…arrow_forwardIf the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.25, the average cost of producing 10 sweaters will be:arrow_forwardCost curves in the long run differ from cost curves in the short run. This is true right.arrow_forward
- 3-5 Starbucks Starbucks is hoping to make use of its excess restaurant capacity in the evenings by experimenting with selling beer and wine. It speculates that the only additional costs are hiring more of the same sort of workers to cover the additional hours and costs of the new line of beverages. What hidden costs might emerge?arrow_forwardwhat is efficient scale in economicsarrow_forwardTrue or False The average total cost cannot equal marginal cost.arrow_forward
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