Question

A firm will continue to operate in the long run only if: Selected Answer: it earns a nonnegative economic profit.

Question 2 Correct A profit-maximizing firm should shut down in the short run if: Selected Answer: total revenue is less than total variable cost.

Question 3 Correct A firm’s long-run average cost curve is estimated by the equation: LAC = 1,000 – 4Q + 0.012Q2. At what quantity is the minimum efficient scale of production? Hint: Write your answer to two decimal places. Selected Answer: 166.67

Question 4 0 out of 10 points Incorrect The production manager of a clothing manufacturer estimates that the total annual cost of producing men’s suits is given by the equation: C = 5,000 + 4,100Q – 8Q2 +0.004Q3. What is the minimum price the firm can accept to not shut down in the short run? Hint: Write your answer to two decimal places. Selected Answer: 105 Response Feedback: Review the section on "Cost Analysis and Optimal Decisions" in chapter six of your text.

Question 5 10 out of 10 points Correct When the long-run average cost is at its minimum, the long-run marginal cost: Selected Answer: is equal to long-run average cost.

Question 6 0 out of 10 points Incorrect Assume that the minimum efficient scale for a typical firm in an industry is 2 million units. The estimated output for the whole industry is 6 million units. Therefore, one can conclude that: Response Feedback: Review the discussion on "Returns to Scale and Scope" in chapter six of your text.

Question 7 10 out of 10 points Correct The minimum efficient scale is important in determining:

Question 8 0 out of 10 points Incorrect A firm produces 100 units of good A at a total cost of $2,124 and separately 200 units of good B at a cost of $1,227. By combining the production of A and B, it is possible to produce the same quantities of A and B respectively at a combined total cost of $2,500. Compute the economies of scope experienced by this firm. Hint: Write your answer to two decimal places. Response Feedback: Review the discussion on "Returns to Scale and Scope" in chapter six of your text.

Answer #1

1. A firm will continue to operate in the long run only if Price is greater or equal to the LRAC at the profit maximizing output level, that is, if the firm is earning non negative Economic profit.

2. A profit maximizing firm should shut down in the short run, if : TR < TVC

Or, (P * Q) < TVC

Or, (PQ/Q) < (TVC/Q)

Or, Price < AVC

3. Minimum efficient scale occurs at the point where LAC is minimized.

When LAC is minimized, then d(LAC)/dQ = 0

Or, d(1000 - 4Q + 0.012Q² )/dQ = 0

Or, -4 + 0.024Q = 0

Or, 0.024Q = 4

Or, Q = (4/0.024) = 166.67

Answer: 166.67

A firm’s long-run average cost curve is estimated by the
equation: AC = 1,000 – 1.4Q + .005Q2 . What is the lowest price per
unit sold that would prevent the firm from shutting down in the
long run? Hint: Write the answer to two decimal places. Hint two:
Total cost (C) is just AC multiplied by Q. Selected Answer: [None
Given] Response Feedback: Review the discussion about the long run
shut down problem in the Chapter Six slides

A firm has long-run total costs of C = 10Q -10Q2 - 0.5Q3. What
is the firm's minimum efficient scale?

Question 12
The long-run average
cost curve will be upward-sloping when the firm has:
constant returns to
scale.
marginal returns to
scale.
economies of scale
diseconomies of
scale
Question 13
A production function
that is characterized by increasing returns to scale cannot be
affected by diminishing marginal product.
True
False
Question 14
A firm always operates at some point on its long-run average
total cost curve in both the long run and the short run.
True
False
Question 15
In...

(a) Draw a figure to scale showing the short-run and
long-run equilibrium of the firm on the assumption that the firm,
but not the industry, has transitioned to their long-run
equilibrium (that is, after changing their plant size but before
entry/exit of other firms). Use the following information to piece
it together: P = $30; the least-cost input combination of producing
q = 2 costs $60; the minimum efficient scale is at q = 8, with LAC
= $12.50 at...

(a) Draw a figure to scale showing the short-run and
long-run equilibrium of the firm on the assumption that the firm,
but not the industry, has transitioned to their long-run
equilibrium (that is, after changing their plant size but before
entry/exit of other firms). Use the following information
to piece it together: P = $30; the least-cost input
combination of producing q = 2 costs $60; the minimum efficient
scale is at q = 8, with LAC = $12.50 at...

Which of the following is true in constructing the long-run
average cost curve?
a.
Short-run average total cost curves are used.
b.
Marginal costs curves are summed at each output level.
c.
Short-run average variable cost curves are summed at each
output level.
d.
Short-run average fixed cost curves are summed at each output
level.
There are _____ different areas identified by the textbook in
moving along a long-run average cost curve.
a.
two
b.
three
c.
five
d.
four...

4.
In the long run a perfectly competitive firm produces
efficiently from the firm perspective.
You are able to see this because the firm _______.
Group of answer choices
produces at the minimum point of the marginal cost curve
produces at the minimum point of the average variable cost
curve
produces at the minimum point of the average total cost
curve
produces at the output where MC = P
5.
Which of the following is correct regarding the graph of...

9. Average cost in the long-run is defined as _____.
TVC/Q
TC/Q
TVC + TFC/Q
none of the above
10. Economies of scale is a characteristic of production where
______.
average costs increase as output increases
total cost decreases as output increases
average cost decreases as output increases
average cost decreases as output decreases
11. Which of the following factors of production is more likely
to be fixed in the short run?
The number of workers.
Changes in electricity consumed....

Use the following long run total cost (LTC) function to answer
the question that follows, LTC=Q^3 - 100Q^2 + 2550Q
a. What levels of output will this firm experience economies of
scale?
i. Q<
b. What levels of output will this firm experience diseconomies
of scale?
ii. Q>

1. In the long run in competitive industries:
A. the number of firms is fixed
B. firms must earn positive economic profit
C. firms earn zero economic profit
D. firms have an incentive to increase output
2. If a firm's total cost is defined as TC = 100 + 4Q +
2Q2 then which of the following is true?
A. Fixed cost is 100
B. Variable cost is 4Q + 2Q
C. marginal cost is 4Q
D. marginal cost if...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 8 minutes ago

asked 27 minutes ago

asked 45 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 3 hours ago