Question

Burgin's Broilers produced one more chicken, and as a result its long-run average total cost increased....

  1. Burgin's Broilers produced one more chicken, and as a result its long-run average total cost increased. What must be true?

    a.

    Burgin's Broilers is experiencing economies of scale when it increases output.
    b.

    Burgin's Broilers is losing money.
    c.

    Burgin's Broilers is experiencing diseconomies of scale when it increases output.
    d.

    Burgin's Broilers is experiencing increasing fixed costs.

  2. People who buy good Z are typically in a hurry when they buy it. Good Z has _____ demand, and if the seller increases the price of good Z, its total revenue will:

    a.

    unit elastic; not change.
    b.

    inelastic; decrease.
    c.

    inelastic; increase.
    d.

    elastic; increase.
  3. Jason's carpentry business has a fixed cost of $5,000 from equipment and tool rental and a variable cost of $40,000 when he builds 100 bookshelves per year. The average total cost of producing 100 bookshelves is:a.

    $450.

    b.

    $5,000.

    c.

    $4,000.

    d.

    $45,000.

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Answer #1

Answer : Option C is correct. Burgen broiler is experiencing diseconomics of scale when it's long run average total cost. It means that diseconomics of scale shows total cost has bee start declining.

Answer : Option C is correct. As consumers purchase good Z has inelastic demand than the price increases resulted in total revenue has been increased as demand for good has been increased.

Answer : Option A is correct.

Total cost = Fixed cost + Variable cost

Total cost = $5000+$40,000 = $45000

AVC = Total cost / Output = $45000/100= $450

Therefore, average total cost is $450.

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