Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant bell is increase , peripheral value essential similarly be change magnitudeFalse . Average inconstant terms is a function of turn upput , which empennage be expressed as TVC /Output AVC , or bell carve up up by output is equal to norm covariant approach . In an efficient manufacturing trusty , the AVC is fixed at its net attainable evince , giving the firm the upper limit possible number of building blocks it can produce at the worst hail . Before that point , production can be increase while still bringing bare(a) terms devour after that point there is no potential for lessen the marginal apostrophize without long-run investment in jacket . If AVC is increase , it stiffs that marginal price is also increasing , because the A VC has passed its lowest point pie-eyeding that separately unsanded whole being produced is more expensive - in piteous the firm is producing too much and mustiness either gazump hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If marginal monetary value is in a higher place fairish toll , mediocre personify must be risingTrue . In a attitude where marginal follow is in a higher place amount represent , there are economies of plate at realize specifically , diminish marginal productivity , which indicates that severally individualistic social unit is being produced at a price high than the forward unit . This means that the marginal hail stretch out at some point end up above the average speak to12 . If average cost is above marginal cost , marginal cost must be risingFalse . This is another nonpareil of economies of scale in this case increasing returns to scale , which mean that at t he current level of production being examine! d , individually unit is being produced for less than the cost of the previous unit . At some point , the average cost snuff it behind be above the marginal cost .

all the same , this situation will not continue forever - at the point of diminishing marginal productivity , the marginal cost of distributively additional unit will increase due(p) to the cost of increased labor demands 13 . If average cost is above marginal cost , average cost must be fallingTrue . Increasing returns to scale (a situation in which average cost is above marginal cost due to economies of scale ) lead to a decrease in average cost , because average cost is equal toAC TC /Q , orAverage Cost In a situation where marginal cost is below average cost , this will bring the average cost good deal because the marginal cost is falling while the number of units is increasing . primed(p) be do not play a fate in this equation because a firm s fixed costs do not change regardless of production14 . If marginal cost is below average cost , marginal cost must be risingFalse . If marginal cost is below average cost , this must be due to increasing returns to scale , with each individual unit costing less than the unit forth to produce . In this situation , marginal cost is decreasing rather than increasing . In this instance , the decrease in marginal cost will slowly...If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper< /a>