EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 7.3, Problem 1TTA
To determine
To indicate: If the minimum efficient scale is constant. Also, to indicate the change in minimum efficient scale due to technology in any one of the industry.
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Think about several different types of industries or markets and the amount of time it might take to change the scale of operation and the size of the production facility for each of these examples. The long-run is a period of time long enough so that all inputs, including facility and equipment, are variable, while in the short run at least one input is fixed. Think about how much time it would take to change the scale of operation for a restaurant, for an automobile plant, for a website designing company... Does it seem that the amount of time that separates the long run from the short run is industry-specific, rather than a set period of time? Share three specific examples.
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The Mini-Case "Economies of Scale at Google" describes economies of scale for Google Cloud Storage. The cost function for this service is well approximated by C = F + cq, where C is total cost, F is fixed cost, c is a constant, and q is output. What is marginal cost for this cost function? What are the average fixed costs, average variable cost, and average cost? Over what range of output does google have economies of scale?
If the general nature of this problem is bothering you let c = 10 and answer each question, then generalize to c being a constant.
Marginal cost is a contant, MC = c.
At what level of output is minimum efficient scale realized?
Chapter 7 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 7.1 - Prob. 1MQCh. 7.1 - Prob. 2MQCh. 7.1 - Prob. 1TTACh. 7.1 - Prob. 2TTACh. 7.2 - Prob. 1MQCh. 7.2 - Prob. 2MQCh. 7.2 - Prob. 1TTACh. 7.2 - Prob. 2TTACh. 7.3 - Prob. 1MQCh. 7.3 - Prob. 2MQ
Ch. 7.3 - Prob. 3MQCh. 7.3 - Prob. 1TTACh. 7.3 - Prob. 2TTACh. 7.5 - Prob. 1TTACh. 7.5 - Prob. 2TTACh. 7.6 - Prob. 1MQCh. 7.6 - Prob. 2MQCh. 7.6 - Prob. 3MQCh. 7.6 - Prob. 1.1MQCh. 7.6 - Prob. 2.1MQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQCh. 7 - Prob. 7.1PCh. 7 - Prob. 7.2PCh. 7 - Prob. 7.3PCh. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Prob. 7.8PCh. 7 - Prob. 7.9PCh. 7 - Prob. 7.10P
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- Average cost decrease indefinitely as output expands. Is that true?arrow_forwardGive reasons, when average cost increases as the total output increases for an increasing cost industry?arrow_forwardThe Mini-Case "Economies of Scale at Google describes economies of scale for Google Cloud Storage. The cost function for this service is well-approximated by K C(q)-F+cq where C is total cost, F is fixed cost, c is a constant and q is output. What is marginal cost for this cost function? What are the average fixed cost, average variable cost, and average cost? Over what range of output does Google have economies of scale? The marginal cost function (MC) is The average fixed cost function (AFC) is AFC- The average variable cost function (AVC) is AVC- MC-C The average cost function (AC) is AC- (Property format your expressions using the tools in the palette. Hover over tools to see keyboard shortcuts. Eg, a fraction can be created with the character) Time Remaining: 02.09.09arrow_forward
- The Mini-Case “Economics of Scale at Google” describes economies of scale for Google Cloud Storage. The cost function for this service is well approximated by C=F +cq, where C is total cost, F is fixed cost, c is a constant, and q is output. What is marginal cost for this cost function? What is average cost? Over what range of output does Google have economies of scale?arrow_forwardWhat are the advantages of internal economies of scale ? Explain shortly.arrow_forwardHow would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect the long-run average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?arrow_forward
- Define economies of scale and explain why they mightarisearrow_forwardExplain economies of scale and how to determine if a firm is experiencing it or not from their cost data.arrow_forwardYou overheard Mr. John, the newly hired marketing manager, saying: “I think our company should take advantage of economies of scale by increasing output, thereby spreading out our overhead fixed costs”.Would you agree with this statement? If not, provide a better description for the term “economies of scale”. Explain how they may be achieved by organizations. Highlight what would prevent them to occur.arrow_forward
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