Homework Answers
Answer 1. the difference between average total cost and average variable cost decreases.
Reason- The difference between average total cost and average variable cost is average fixed cost. AFC=TFC/Q, TFC is total fixed cost which is constant. When output rises, AFC falls.
Answer 2. Both a and b are correct.
Reason-MC=AVC and MC=ATC at their minimum. But AFC is Falling as output rises, so MC≠ AFC at it's minimum
Answer 3. $80
Reason- When Q=6, TC=$130 and TFC=$50
TVC=TC-TFC= $130-$50=$80
Answer 4. Horizontal
Reason- For a perfectly competitive firm, price equals marginal revenue. Since price is given and is horizontal, MR is also horizontal.
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Question 1 In the short run, as output increases, the difference between average total cost and...
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The following graph shows the short-run average total cost
curves and the long-run average total cost curve for a publishing
firm. The five marked quantities indicate points of tangency
between each short-run average total cost curve ( SRATC ) and the
long-run average total cost curve ( LRATC ); for example, Q1 marks
the point of tangency between SRATC1 and LRATC .
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QUESTION 6 The diagram below represents the short-run total cost function for the Fidget Company, which produces widgets. Please use it to answer the following questions. TC 225 ----- 180 -------- 145 ------- 120- 105 100 0 1 2 3 4 5 Q The equation for the marginal cost function represented in the diagram is: a. MC = 1002 b. MC = 100 +5Q2 OC. MC = 100 d. MC = 1000 e. MC = 100 QUESTION 9 The difference...
[46] As a firm increases its production in the short-run, the difference between short-run total cost and short-run total variable cost gets smaller and smaller. True B False
The following graph shows the short-run average total cost
curves and the long-run average total cost curve for a publishing
firm. The five marked quantities indicate points of tangency
between each short-run average total cost curve ( SRATC ) and the
long-run average total cost curve ( LRATC ); for example, Q1 marks
the point of tangency between SRATC1 and LRATC .
7. Long-run cost relationships The following graph shows the short-run average total cost curves and the long-run average...
24. The long run average cost curve decreases due to a. A reduction in short run marginal cost b. A reduction in short run average cost curves c. Economies of scale d. Both a and b e. Both b and c You are given the following cost data: Quantity TVC TFC REALITATE 1250 12 25 34 46 25. What can you say regarding the pattern of the cost? a. Average fixed cost falls as quantity increases b. Average variable cost...
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