Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 21, Problem 14CQ
To determine
Draw a U-shaped
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Which of the following graphs shows average fixed cost?
Explain the shapes of the marginal and average cost curves of a firm. Use a diagram to support your answer.
Using the multipoint curved line drawing tool, draw the firm's marginal cost curve. Label this curve 'MC'.
Chapter 21 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Question 15 Examine the graph below. The firm is experiencing decreasing returns to scale between points SRATC5 E LRATC SRATC₁ SRATC₂ SRATC4 BCD Quantity of Output Average Cost (dollars) O A and B O B and C. OB and D C and E. SRATC3arrow_forward“A firm that earns only normal profit is not covering all its costs.” Do you agree or disagree?arrow_forwardIdentify the economies of scale where the producer operates. Show cost curves of the firm graphically"arrow_forward
- Discuss the relationship, with the use of a graphical illustration(prefferably visual), of the firm's total product curve and its marginal cost curve. Hint: Law of diminishing marginal returns.arrow_forwardConsider this statement: “A firm should increaseoutput when it makes a profit.” Do you agree ordisagree? Explain.arrow_forwardDiscuss the relationship, with the use of a graphical illustration(virtual), of the firm's total product curve and its marginal cost curve. Hint: Law of diminishing marginal returns.arrow_forward
- If marginal cost is decreasing, what is happening to an average variable cost (decreasing, increasing) Note : don't use chat gptarrow_forwardHow do you derive the marginal cost (MC) curve of a firm? Explain. use graph.arrow_forwardHow do you derive the marginal cost (MC) curve of a firm? Explain. Answer question step by step and use graph.arrow_forward
- Show the effect of diminishing returns on the marginal and average cost curves of a firm in the short-run. (be sure to explain your diagrams)arrow_forwardIn the long run, fixed costs arearrow_forwardEach graph below illustrates three short run cost curves for firms, where ATC is Average Total Cost (aka Average Cost), MC is Marginal Cost, and AVC is Average Variable Cost. Based on what you know about the relationships between these curves, which of the following graph is correct? MC ATC ATC AVC AVC B. MC MC ATC AVC ATC AVC D. MC AVC ATC E. D. OAarrow_forward
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