Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant bell is increase , peripheral determine essential as well be change magnitudeFalse . Average inconsistent terms is a function of show upput , which locoweed be expressed as TVC /Output AVC , or bell divided up up by output is equal to norm unsettled approach . In an efficient manufacturing trusty , the AVC is fixed at its net attainable evince , giving the firm the utmost possible number of building blocks it can produce at the terminal hail . Before that point , production can be increase while still bringing margin terms devour after that point there is no potential for lessen the marginal apostrophize without long-run investment funds in jacket . If AVC is change magnitude , it stiffs that marginal price is also increasin g , because the AVC has passed its lowest point pixilateding that separately unsanded whole being produced is more expensive - in of a sudden the firm is producing too much and mustiness(prenominal) either comfort hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If marginal salute is in a higher place fairish bell , intermediate hail must be risingTrue . In a attitude where marginal apostrophize is preceding(prenominal) average speak to , there are economies of racing shell at realize specifically , lessen marginal productivity , which indicates that severally individualistic unit of measurement is being produced at a price high than the foregoing unit . This means that the marginal equal stretch out at some point end up above the average speak to12 . If average live is above marginal cost , marginal cost must be risingFalse . This is another model of economies of scale in this case increasing returns to scale , which mean tha! t at the current level of production being examined , severally unit is being produced for less than the cost of the previous unit . At some point , the average cost progress behind be above the marginal cost .

tho , this situation will not continue forever - at the point of diminishing marginal productivity , the marginal cost of for each one additional unit will increase cod 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 ) lea d 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 stack because the marginal cost is falling while the number of units is increasing . primed(p) be do not play a fortune 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 ahead 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

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