ECON 102 Lecture Notes - Lecture 18: Marginal Cost, Marginal Revenue, Deadweight Loss

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oliveferret918

27 Dec 2015

School

University of Illinois

Department

Economics

Course

ECON 102

Professor

Isaac Di Ianni

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ECON 102 Full Course Notes

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In the long run, once farmer is able to adjust amount of wrokers that they have. The range of economies of scale: the range where long run average total costs decrease as output increases. If a firm is engaging in capital accumulation getting factories larger and larger machines and producing more output, they"re going to advertise and promote the firm but eventually they"ll grow so much it won"t be as profitable. Downsizing when firm shrinks, they lay off: by producing less, they"ll become more profitable results in lower costs per unit. The more employees you have, the more supervisors you have to supervise employees. If a firm produces too little or too much and average cost is higher than it should be, that firm will have a difficult time competing. Firm needs to increase scale of operation to compete. The optimal firm size (minimum efficient scale): the quantity of production that minimizes long run average total costs.

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

constant costs

increasing returns to scale

constant returns to scale

isocost curve

decreasing returns to scale

isoquant

diseconomies of scale

long-run average cost

economies of scale

long-run marginal cost

economies of scope

marginal rate of technical substitution

expansion path

short-run expansion path

___A curve that displays all the various combinations of inputs that will produce a given amount of output.

___The rate at which one input is substituted for another along an isoquant.

___Line that shows all the possible combinations of inputs that can be purchased for a given total cost.

___A curve showing all of the cost-minimizing levels of input usage for various levels of output.

___When the usage of all inputs is increased by an equal proportionate amount, output ___increases by exactly the same proportion.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a larger proportionate amount.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a smaller proportionate amount.

___Cost per unit in the long run.

___The change in long-run total cost per unit change in output.

___When long-run average cost falls as output increases.

___When long-run average cost increases with increases in output.

___Long-run average and marginal costs are equal for all levels of output.

___The situation in which the joint cost of producing two goods is less than the sum of the separate costs of producing the two goods.

___Horizontal line showing the cost-minimizing input combinations for various output levels when capital is fixed in the short run.

aquamarineguinea-pig889

1. The law of diminishing marginal productivity states that

a. As you expand output, your marginal productivity eventually increases

b. As you expand output, your marginal productivity eventually declines

c. As you expand output, the total product eventually increases

2. What are economies of scale?

a. decreasing average costs as production increases

b. increasing average costs as production increases

c. increasing fixed costs as production increases

d. None of the above

3. What are economies of scope?

a. lower average costs when multiple different products are produced

b. higher average costs when multiple different products are produced

c. Constant average costs when multiple different products are produced

d. None of the above

4. It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries. If Firm A merges with firm B, it can produce both the five radios and the five batteries for $1000. The firm has experienced

a. Economies of scale

b. Economies of scope

c. Diseconomies of scale

d. Diseconomies of scope

5. It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries. If Firm A merges with firm B, it can produce both the five radios and the five batteries for $1500. The firm has experienced

a. Economies of scale

b. Economies of scope

c. Diseconomies of scale

d. Diseconomies of scope

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ECON 102 Lecture Notes - Lecture 18: Marginal Cost, Marginal Revenue, Deadweight Loss

ECON 102 Full Course Notes

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