ECN 102 Lecture Notes - Lecture 28: Fixed Cost, Perfect Competition

7 views2 pages

redminnow421

22 Dec 2020

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Short-run average total cost curves: average total cost curve defined for a given level of fixed cost defined for the short run, the period of time over which fixed cost doesn"t vary. Long-run average total cost curve (lratc): shows the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output. If there are many possible choices of a fixed cost, long-run average total cost curve will have the smooth u shape. In the long run, when a producer has had time to choose the fixed cost appropriate for its desired level of output, the producer will be at some point on the lratc. If output is altered, the firm will no longer be on its long-run average total cost curve and will instead be moving along its current short-run average total cost curve.

Related Questions

10-When marginal cost is greater than average total cost,
A. Average total cost must be increasing with output
B. Average variable cost must be decreasing with output
C. Average fixed cost must be increasing with output
D. Marginal cost must be increasing with output

11-If a firm's demand curve falls below its AVC curve, then the firm should
A. Shut down now
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Shutdown in the long-run

12- The demand curve facing a perfectly competitive firm is
A. Upward sloping
B. Perfectly inelastic
C. Downward sloping
D. Perfectly elastic

13-If the demand curve falls below the ATC curve but lies above AVC, then the firm should
A. Should shut down
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Operate in the short run and the long run

14-At the output where MC = ATC = P, the perfectly competitive firm
A. Should shutdown
B. Has no economic profit
C. Is not profit maximizing
D. Should raise output

ivorybee159

36) A firm encountering economies of scale over some range of output will have a:

a) rising long-run average cost curve.

b) falling long-run average cost curve.

c) constant long-run average cost curve.

d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

a) economies of scale.

b) normative economies.

c) diminishing marginal returns.

d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) increasing the average total costs.

40) Economies and diseconomies of scale explain why the:

a) short-run average fixed cost curve declines so long as output increases.

b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.

c) long-run average total cost curve is typically U-shaped.

d) short-run average variable cost curve is U-shaped.

jadeshark411

The distribution of family income is preferable than the distribution of household income because

Select one:

a. household income is less accurate.

b. more households than families.

c. a household can be a single person living alone.

d. a family must be composed of at least two people.

e. family size varies less among the quantiles.

Which of the following statements is false?

Select one:

a. The long-run average-total-cost curve does not connect the minimum points of each of the short-run average-total-cost curves.

b. The long-run average-total-cost curve shows the minimum cost of producing each level of output when all resources are variable.

c. The short-run average-total-cost curve shows the minimum costs of producing each level of output when at least one input is fixed.

d. If short-run average-total-costs are declining, then economies of scale exist.

e. None of the above.

ECN 102 Lecture Notes - Lecture 28: Fixed Cost, Perfect Competition

Document Summary

Get access

Related Documents

ECN 102 Lecture Notes - Lecture 27: Sherman Antitrust Act, Deadweight Loss, Clayton Antitrust Act

ECN 102 Lecture Notes - Lecture 23: Sunk Costs, Decision Rule

ECN 102 Lecture Notes - Lecture 30: Marginal Cost, Fixed Cost, Opportunity Cost

Related Questions