MGEA02H3 Study Guide - Final Guide: Monopoly Price, Average Variable Cost, Natural Monopoly

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8 Jul 2015

School

UTSC

Department

Economics for Management Studies

Course

MGEA02H3

Professor

Jack Parkinson

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MGEA02H3 Full Course Notes

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Mgea02 cost of production (iii) & competitive markets (ii) Cost of production (iii) long run costs. The firms can enter and exit freely, under the perfectly competitive market. The lrac curve, is a combination of all minimum. Firms will operate in min lrac point, or where. Long run cost curve is the min lrac point, and it is the lr. Return to scale: return to scale: rate at which when inputs increases, how much does output increases proportionally. Increasing return to scale: situation when output is more than double when inputs are doubled. Constant returns to scale: situation when output is double when inputs are doubled. Decreasing return to scale: situation when output is less then double, when inputs are doubled. Economies of scale: the cost advantages that the firm gains because the increase in size, with cost per unit of output generally decreasing with the increasing scale.

Related Questions

39. Which of the following statements about the long run average cost curve (LRAC) would generally be true? 1) When the LRAC is falling, the production firm is experiencing economies of scale. II) The LRAC forms an envelope underneath all the possible short run average cost curves III) The LRAC shifts upwards as industry output increases if the industry is an increasing cost industry. (A) none (B) I only (C) II only (D) III only (E) I and II (F) I and III (G) II and III (H) I, II and III

14. Which of the following statements about the long run average cost curve (LRAC) would generally be true? 1) When the LRAC is falling, the production firm is experiencing economies of scale. II) The LRAC forms an envelope underneath all the possible short run average cost curves III) The LRAC shifts upwards as industry output increases if the industry is an increasing cost industry. (A) none (B) I only (C) II only (D) III only (E) I and II (F) I and III (G) II and III (H) I, II and III

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.

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MGEA02H3 Study Guide - Final Guide: Monopoly Price, Average Variable Cost, Natural Monopoly

MGEA02H3 Full Course Notes

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