ECN E102 Lecture Notes - Lecture 27: Perfect Competition, Indian Railways, Takers

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rubyporpoise450

9 Dec 2020

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Costs in the short run and in the long run. The relationship between short-run and long-run average total cost depends on the time horizon firm"s long-run cost curves differ from its short-run cost curves. For many firms, the division of total costs between fixed and variable costs. Because many decisions are fixed in the short-run but variable in the long-run, a. The long-run average total cost curve is a much flatter u-shape than the short-run. All the short-run curves lie on or above the long-run curve. These properties arise because firms have greater flexibility in the long run. In the long run, the firm gets to choose which short-run curve it wants to average total cost curve use. In the short-run, the firm has to use whatever short-run curve it chose in. There is no single answer about how long it takes a firm to adjust its production the past facilities.

Related Questions

36) A firm encountering economies of scale over some range of output will have a:

a) rising long-run average cost curve.

b) falling long-run average cost curve.

c) constant long-run average cost curve.

d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

a) economies of scale.

b) normative economies.

c) diminishing marginal returns.

d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) increasing the average total costs.

40) Economies and diseconomies of scale explain why the:

a) short-run average fixed cost curve declines so long as output increases.

b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.

c) long-run average total cost curve is typically U-shaped.

d) short-run average variable cost curve is U-shaped.

jadeshark411

A student has just written on an exam that, in the long run, fixed cost will make the average total cost curve slope downward. Why will the professor mark it incorrect?

a) In the long run, there are no fixed costs, meaning the average total cost curve shifts down.

b) In the long run, fixed cost decreases as costs are spread out over a greater quantity of output. Declining fixed cost accounts for the downward-sloping average total cost curve.

c) In the long run, fixed costs increases as firms build new plants and purchase new capital. This means that the average total cost curve will eventually slope upward.

d) In the long run, firms have no fixed costâall costs are variable. The shape of the long-run average total cost curve is determined by economies of scale.

skysardine522

The distribution of family income is preferable than the distribution of household income because

Select one:

a. household income is less accurate.

b. more households than families.

c. a household can be a single person living alone.

d. a family must be composed of at least two people.

e. family size varies less among the quantiles.

Which of the following statements is false?

Select one:

a. The long-run average-total-cost curve does not connect the minimum points of each of the short-run average-total-cost curves.

b. The long-run average-total-cost curve shows the minimum cost of producing each level of output when all resources are variable.

c. The short-run average-total-cost curve shows the minimum costs of producing each level of output when at least one input is fixed.

d. If short-run average-total-costs are declining, then economies of scale exist.

e. None of the above.

ECN E102 Lecture Notes - Lecture 27: Perfect Competition, Indian Railways, Takers

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