Long run average cost curve.

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 27APA

a)

To determine

Long run average cost curve.

b)

To determine

Use of long run average cost curve.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

The following table shows data for quantity (Q), variable cost (VC), and fixed cost (FC) for a ski company. a) Fill the table for total cost (TC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC). Make sure to show your work for at least one line. Q VC FC TC ATC AVC MC 30 1 10 30 25 30 3 45 30 4 70 30 100 30 6 135 30 b) Now suppose the firm decides to produce a quantity of 5 units (Q=5), and it sells for a price of $25 each. Answer the following: 1. Calculate the company's profits or losses 2. How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? 3. At the given quantity and price, is the marginal unit produced adding or subtracting to profits? Should the fırm produce at this level of output?

Jakie Pays $100 a day for each canoe it rents and $50 a day for each canoe operator it hire a. Graph the ATC curves for plant 1 and Plant 2. b. On jackie's LRAC curve what is the average cost of producing 40, 75 and 85 rides a week? c. What is jackie's minimum efficient scale?

14. Explain which of the following is a fixed cost or a variable cost for Southwest Airlines. a. The cost of jet fuel used in its airplanes. b. The monthly rent on its Dallas, Texas headquarters. c. The yearly lease payments on its current inventory of Boeing 737 jets. d. The cost of peanuts it serves to passengers. e. The salary paid to Laura Wright, Southwest's Senior Vice President of Finance and Chief Financial Officer. f. The gate rental fees it pays to McCarran International Airport in Las Vegas, Nevada.