run average total cost curve and is also known as the output of long run productive efficiency. The MES is rarely a single output - more likely it is a range of output levels where average cost is minimized where the firm achieves constant returns to scale. The MES will vary from industry to industry depending on the nature of the cost structure in a particular sector of the economy. When the ratio of fixed to variable costs is very high‚ there is great potential for reducing the average cost of production
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marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 6 through 10. Answer each question clearly and concisely. 1. Suppose that a firm has fixed costs of $25 per day for renting one machine and its variable costs are as shown in the table below. Labour Output VC TC AFC AVC ATC MC 0 0 $ 0 25 ---- ---- ---- ---- 1 4 25 50 6.25 6.25 12.50 25 2 10 50 75 2.50 5.00 7.50 25 3 13 75 100 1.92 5.77 7.69 25 4 15 100 125 1.67 6.67 8.33
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profits are: Equal to the difference between accounting profits and implicit cost 12 Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly line basis? A change in production to a redesigned and retooled facility 13 the law of diminishing returns in a manufacturing plant of a fixed capacity implies that‚ eventually‚ employing one: More workers will decrease the average amount of output
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have fixed costs of $1 billion and constant marginal costs of $10‚000 per car. If Saab produces 50‚000 cars per year and Volvo produces 200‚000‚ calculate the average fixed cost and average total cost for each company. On the basis of these costs‚ which company’s market share should grow in relative terms? Answer: Average total cost is average fixed cost plus marginal cost: ATC = FC/Q + MC. Volvo’s average fixed cost $1 billion/200‚000 = 5‚000 is much less than Saab’s average fixed cost $1 billion/50
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CHAPTER 9—PERFECT COMPETITION HOME WORK 1. Market structure is determined by the a. volume of discounts‚ the quantity of foreign exchange‚ and the effects of Federal Reserve policy b. influence of government policy‚ the number of qualified buyers‚ and the effect of generally accepted accounting principles c. number of buyers and sellers‚ whether the product is standardized‚ whether there is free entry and exit‚ and how well informed the buyers and sellers are about the market d.
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• Question 1 2 out of 2 points | | | |[pic] |In making a decision about whether to increase its advertising budget the firm management should not consider | | | | | | | | | | | |
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A.1.a. Average materials cost per unit Probability distribution of material cost per unit Material Cost Probability Cumulative Probability Material cost per probability 33 0.04 0.00-0.04 1.32 35 0.05 0.04-0.09 1.75 38 0.12 0.09-0.21 4.56 39 0.79 0.21-1.00 30.81 Total 1.00 38.44 Average material cost per unit = (33*0.04) + (35*0.05) + (38*0.12) + (39*0.79) = $38.44 Simulation results A.1.b. Average labor cost per unit
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employees were making on average before he or she joined‚ the average output per worker will rise‚ e.g. if three workers make 9 units in total and the fourth adds another 7‚ the average will rise from 3 units each to 4 units each. If the extra worker makes fewer extra units the average will fall‚ e.g. three workers make 9 units in total(on average 3 each) and the fourth add only 1 unit‚ the average 10 divided by 4‚i.e. 2.5 units each. Marginal cost (MC) is the extra cost of producing another unit
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ASSIGNMENT NUMBER AND TITILE: | 1‚ COST CURVES‚ MONOPOLY‚ MICROECONOMICS REFORM. BUECO1507 (ECONOMICS ASSIGNMENT) Answer 1.) Cost Curves a.) The Marginal Cost (MC) - The increase in the cost that accompanies a unit increase in output; the partial derivative of the cost function with respect to output. Additional cost associated with producing one more unit of output. Marginal cost curve - A curve that graphically
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last unit produced and sold. What is the average revenue per unit‚ and how many units were sold? a. $5 and 50 b. $5 and 100 c. $10 and 50 d. $10 and 100 When a profit-maximizing firm in a competitive market has zero economic profit‚ accounting profit a. is negative (accounting losses). b. is positive. c. is also zero. d. could be positive‚ negative or zero. When a competitive firm triples the amount of output it sells‚ a. its total revenue triples. b. its average revenue triples. c. its marginal revenue
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