Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Question
Chapter 8, Problem 7QFR
To determine
To illustrate the examples of economies of scale, constant returns to scale and diseconomies of scale
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Use economies of scale to link a firm’s size and its average costs in the long run.
Define economies of scale and explain why they might arise. Define diseconomies of scale and explain why they might arise.
Distinguish between economies of scale and diseconomies of scale. Give examples of why a firm may experience economies of scale.
Chapter 8 Solutions
Principles of Economics (Second Edition)
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- The following statement describes which source of low costs? “The more the firm has ever made, the better it gets at making.” Group of answer choices Learning curves Economies of scale Diseconomies of scale Differential low cost accessarrow_forwardType your answers. a)In your own words, state and briefly explain two reasons that lead to economies of scale. 50 to 100 words b)In your own words, state and briefly explain two reasons that lead to diseconomies of scale. 50 to 100 wordsarrow_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
- Draw the short-run average total cost (ATC), average variable cost (AVC), and marginal cost (MC) curves for a bicycle factory. Assume the usual U-shapes. Label everything. Show the efficient scale at a quantity of 120 bicycles.arrow_forwarddescribe economies and diseconomies of scale while explaining possible reasons for both situations to occurarrow_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 “economies of scale”. Explain how they may be achieved by organizations. Highlight what would prevent them to occur.arrow_forward
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