Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 9.8, Problem 2QQ
To determine
Changes in short run average total cost .
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Define economics of scale and explain they might arise. Define diseconomies of scale and explain why they might arise.
Whenever a firm increases both its labor and capital by 2 percent, and as a result, output increases by more than 2
percent, then the production process is exhibiting
a. increasing returns to scale.
b. constant returns to scale.
c. decreasing returns to scale.
d. economies of scale.
e.
both a) and d) are correct
If there are diseconomies of scale within a given range of output, which of following is(are) TRUE?
A.Long-run average cost must equal short-run average cost.
B.The long-run average cost curve must be upward sloping within that range of output.
C.The short-run average cost curve must be upward sloping within that range of output.
D. All of the above.
Chapter 9 Solutions
Economics (Irwin Economics)
Ch. 9.2 - Prob. 1QQCh. 9.2 - Prob. 2QQCh. 9.2 - Prob. 3QQCh. 9.2 - Prob. 4QQCh. 9.5 - Prob. 1QQCh. 9.5 - Prob. 2QQCh. 9.5 - Prob. 3QQCh. 9.5 - Prob. 4QQCh. 9.8 - Prob. 1QQCh. 9.8 - Prob. 2QQ
Ch. 9.8 - Prob. 3QQCh. 9.8 - Prob. 4QQCh. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 1RQCh. 9 - Which of the following are short-run and which are...Ch. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4P
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Similar questions
- Production Point Capital (K) Labor (L) Output (Q) A 1 1 2 B 2 2 C 1 3 D 2 4 E 1 5 F 2 6 G 1 7 H 2 8 X The profuction function is given as: Q=αK + βL B andf E lie on the same isoquant, while D and G are on a higher isoquant. 3. a. This production exhibits what kind of returns to scale? Explain how you arrived at this conclusion. b. Will any combination of α and β lead to this production exhibiting increasing returns to scale? c. True or false. In general, production can display diminishing returns in all variables but still display increasing returns to scale. Explain.arrow_forwardEconomies to scale refer to Select one: a. the point at which marginal cost equals average cost. b. the fact that in the long run, fixed costs remain constant as output increases. c. the range of output over which the long-run average cost falls as output increases. d. a feature of short-run production functions but not long-run production functions.arrow_forwardexplain with graphs the difference between economies of scale, economies of scope and returns to scale.arrow_forward
- Just 2.1arrow_forwardGive typing answer with explanation and conclusionarrow_forward(1) Use the graph to answer the question. Between points C and D, the long-run average total cost curve is characterized by ________ because the firm is experiencing ________ returns to scale. A-constant returns; constant. B-economies of scale; increasing. C-economies of scale; constant D-diseconomies of scale; increasing. E-diseconomies of scale; decreasing The graph is attached on the following (2) If a firm is operating at a point on its long-run average total cost curve where the slope is negative, it is A-experiencing increasing returns to scale. B-experiencing constant returns to scale C-experiencing decreasing returns to scale. D-achieving efficient scale. E-making progressively less as it increases its inputs (3) If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true? A-Average total cost < price; marginal cost = marginal revenue B-Average total cost > price; marginal cost = marginal revenue C-Average…arrow_forward
- When a firm triples its inputs and finds that its output has less than tripled this is known as: a. a violation of the law of diminishing returns. b. constant returns to scale. c. diseconomies of scale. d. economies of scale.arrow_forwardExplain the Law of Returns to Scale with the help of an example.arrow_forwardHow does the impact of fixed costs change production decisions in the short run and in the long run? Use the average-total-cost (ATC) model in the photo to answerarrow_forward
- 4. Questions and Pr Diseconomies of scale ( The law of diminishing marginal returns erence between the law of diminishing marginal returns and diseconomies of scale. applies to the short run, when at least one input is fixed, whereas when all inputs are variable and is therefore a long-run concept. Grade It Now Save & Continu Continue without saarrow_forwardA firm has the production function f(x, y) = x®y0.3, where a>0.7. This firm has Select one: a. decreasing returns to scale and increasing marginal product for factor x and y. b. None of the above. c. increasing returns to scale and diminishing marginal product of factor x. d. constant returns to scale. e. decreasing returns to scale and diminishing marginal products for factor y.arrow_forwardExplain two reasons due to which economies of scale may arise. Write your answer within 40 words. You are not required to draw any diagramsarrow_forward
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