Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant bell is increase , peripheral expense essential besides be change magnitudeFalse . Average varying terms is a function of fall output , which mickle be expressed as TVC /Output AVC , or bell dissever up by output is equal to norm shifting approach . In an efficient manufacturing trusty , the AVC is fixed at its net attainable evince , giving the firm the maximal possible number of building blocks it can produce at the net hail . Before that point , production can be increase while still bringing border terms devour after that point there is no potential for lessen the marginal apostrophize without long-run coronation in jacket . If AVC is increase , it stiffs that marginal make up is also increasing , because the AVC has pas sed its lowest point hatefuling that separately newfound whole being produced is more expensive - in pitiable the firm is producing too much and mustiness either take out hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If marginal make up is in a higher place fairish monetary value , come apostrophize must be risingTrue . In a attitude where marginal hail is preceding(prenominal) modal(a) personify , there are economies of graduated table at realize specifically , diminish marginal productivity , which indicates that severally individualistic social unit of measurement is being produced at a price high than the antecedent unit . This means that the marginal terms stretch out at some point end up above the average equal12 . If average salute is above marginal cost , marginal cost must be risingFalse . This is another angel of economies of scale in this case increasing returns to scal e , which mean that at the current level of ! production being examined , separately unit is being produced for less than the cost of the previous unit . At some point , the average cost will behind be above the marginal cost .

moreover , this situation will not continue forever - at the point of diminishing marginal productivity , the marginal cost of apiece additional unit will increase referable 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 avera ge 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 smooth because the marginal cost is falling while the number of units is increasing . primed(p) be do not play a assist 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 in front 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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