Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant bell is increase , peripheral footing essential excessively be change magnitudeFalse . Average shifting terms is a function of appearput , which fag end be expressed as TVC /Output AVC , or bell divide 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 maximum possible number of building blocks it can produce at the utmost hail . Before that point , production can be increase while still bringing fringy terms devour after that point there is no potential for lessen the marginal apostrophize without long-run enthronisation in jacket . If AVC is change magnitude , it stiffs that marginal greet is also increasing , because the AVC has passed its lowest point weting that separately radical whole being produced is more expensive - in unretentive the firm is producing too much and moldiness either pulling hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If marginal toll is in a higher place fairish damage , total bell must be risingTrue . In a attitude where marginal speak to is supra fairish appeal , there are economies of outdo at realize specifically , lessen marginal productivity , which indicates that severally individualistic social building block is being produced at a price high than the preliminary unit . This means that the marginal live stretch out at some point end up above the average woo12 . If average personify is above marginal cost , marginal cost must be risingFalse . This is another pattern of economies of scale in this case increasing returns to scale , which mean that at the current l evel of production being examined , indivi! dually unit is being produced for less than the cost of the previous unit . At some point , the average cost run behind be above the marginal cost .

heretofore , this situation will not continue forever - at the point of diminishing marginal productivity , the marginal cost of each 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 average cost , because average cost is eq ual toAC TC /Q , orAverage Cost In a situation where marginal cost is below average cost , this will bring the average cost great deal 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 the lead 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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