💬 👋 We’re always here. Join our Discord to connect with other students 24/7, any time, night or day.Join Here!

Like

Report

Get the answer to your homework problem.

Try Numerade Free for 7 Days

Consider the following table of long-run total costs for three different firms: Does each of these firms experience economies of scale or diseconomies of scale?

$\begin{array}{ccccccc}{\text { Quantity }} & {1} & {2} & {3} & {4} & {5} & {6} & {7} \\ \hline \text { Firm 1 } & {60} & {35} & {26.67} & {22.5} & {20} & {18.33} & {17.14} \\ {\text { Firm } 2} & {11} & {12} & {13} & {14} & {15} & {16} & {17} \\ {\text { Firm } 3} & {21} & {17} & {16.33} & {16.5} & {17} & {17.66} & {18.4} \\ \hline\end{array}$Note that as scale increases, average cost decreases for firm $1,$ increases for firm 2 and is U shaped for firm $3 .$ Thus, there are increasing returns to scale for Firm 1 and decreasing returns to scale for Firm $2 .$ Firm 3 has neither increasing returns nor decreasing returns to scale.

No Related Courses

Chapter 13

The Costs of Production

The Economics of Labor Markets

Firm Behavior and the Organization of Industry

How Markets Work

05:14

Consider the variables tha…

10:26

The following table gives …

03:38

Draw the long-run total co…

03:20

Continuing with the scenar…

03:24

Consider the curve in Figu…

10:38

In the long-run equilibriu…

05:45

Consider total cost and to…

04:58

The table below lists the …

02:57

The following tables give …

02:49

How do we calculate each o…

Okay. In this question, we have to observe whether these three firms are economies of scale or face economies of scale. So in order to observe that we have to use average total cost. But when we have here is total cost. So we have to calculate that part by ourselves. Okay, so when the quantity is one, the number here are all just average total cost. So So All right. They're rich. Total cost in color blue. So these numbers are all correct. And then in quantity, when the quantity is too, we have to divide these numbers by two. So, um, think of writing down here. So thirty five and then twelves and then seventeen. Okay. And then this divided by three is eighty degraded by green iss twenty six with six. Then after we calculated all these numbers, we will then see their increasing or decreasing. And it's like mostly sixteen. Okay, this divided by four, which is twenty two point Right. Fine, then here it is. Fourteen learn, sixty two divided, but for sixteen point. Bye. Well, business point traded. Thiss number divided by five is twenty. You're fifteen in seventeen, then this divided by six this one hundred ten. Twenty six. This maintain point three. And this is sixteen. Business seventeen. Wait six. Okay, lastly, one hundred and twenty. Divided by seven. He's seventeen point one. When? One night. If I did. Sorry. When? When I defied it. Fire seven is seventeen and they want to knight seven. This eighteen point four. Okay, so since we have calculated all the numbers we can compare right now, so for firm, eh? We see that it goes from sixty to thirty five to twenty six point six. So it is like decrease in increasing their crime scene forever. So this is the smallest number here, so we can see seeing that for firm aid. The average total cost is decreasing as they produce more. So they are experiencing economic continous off scale approach is right in here because the average total cost is decreasing. Okay, So far from B, it is eleven, twelve, thirteen, fourteen, fifteen, sixteen, seventeen. So it is increasing so far from being it is experiencing this economies of scale. What about from seek? It is like going from twenty one to seventeen goes down, goes down and then the men of the number here is this sixteen point three, It goes down and it goes up. And so it is like a U shape thing so far from C. It is experiencing are becomes off scale at first. And then after it reaches the minimum corn, it goes up again. So it isthe experience in this economies of scale. On the right branch of this average little Kurt s so far from C, it is experiencing both, while far from a day's economies of scale and from beasts, police, economies of scale.

Consider the variables that shift long-run aggregate supply and the variable…

The following table gives the short-run and long-run total costs for various…

Draw the long-run total cost and long-run average cost curves for a firm tha…

Continuing with the scenario in question $1,$ in the long run, the positive …

Consider the curve in Figure $10.6,$ which shows the market demand, marginal…

In the long-run equilibrium of a competitive marketwith identical firms,…

Consider total cost and total revenue given in the following table:$$\ma…

The table below lists the profits and losses of Fitness Sales over a 3 -year…

The following tables give information about demand and total cost for two fi…

How do we calculate each of the following: marginal cost, average total cost…