Identify the production with economies of scale, diseconomies of scale, and constant return to scale.

Question

Want to see the full answer?

Answer 1

Question

Chapter 8, Problem 6SP

To determine

Identify the production with economies of scale, diseconomies of scale, and constant return to scale.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Use economies of scale to link a firm’s size and its average costs in the long run.

In 1796, Gottfried Christoph Härtel, a German music publisher, calculated the cost of printing music using an engraved plate technology and used these estimated cost functions to make production decisions. Härtel figured that the fixed cost of printing a musical page—the cost of engraving the plates—was 900 pfennings. The marginal cost of each additional copy of the page is 5 pfennings (Scherer 2001). a. Graph the total cost, average total cost, average variable cost, and marginal cost functions. b. Is there a cost advantage to having only one music publisher print a given composition? Why? c. Härtel used his data to do the following type of analysis. Suppose he expects to sell exactly 300 copies of a composition at 15 pfennings per page of the composition. What is the greatest amount the publisher is willing to pay the composer per page of the composition?

You 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.