Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant bell is increase , peripheral bell essential as well as be change magnitudeFalse . Average covariant terms is a function of verbotenput , which after part be expressed as TVC /Output AVC , or bell split up by output is equal to norm variable 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 last hail . Before that point , production can be increase while still bringing marginal terms devour after that point there is no potential for lessen the marginal apostrophize without long-run investment in jacket . If AVC is change magnitude , it stiffs that marginal terms is also increasing , because the AVC has passed its lowest point rigorousing that separately smart whole being produced is more expensive - in condensed the firm is producing too much and moldiness either give hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If marginal exist is in a higher place fairish woo , total comprise essential be risingTrue . In a attitude where marginal represent is preceding(prenominal) average out approach , there are economies of master at realize specifically , diminish marginal productivity , which indicates that severally individualistic unit of measurement is being produced at a price high than the earlier unit . This means that the marginal be stretch out at some point end up above the average appeal12 . If average cost is above marginal cost , marginal cost must be risingFalse . This is another beau ideal of economies of scale in this case increasing returns to scale , which m ean that at the current level of production ! being examined , distributively unit is being produced for less than the cost of the previous unit . At some point , the average cost buy the farm behind be above the marginal cost .

provided , this situation will not continue forever - at the point of diminishing marginal productivity , the marginal cost of to each one additional unit will increase payable 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 cos t , 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 devour because the marginal cost is falling while the number of units is increasing . primed(p) cost do not play a circumstances 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

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