Microeconomics divides costs in to “short-run costs” and “long-run costs”. Can “long-run” differ between firms? Include a short example in your answer.
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“long-run” differ between firms? Include a short example in your answer.
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Solved in 3 steps
- Let's play around with the concepts of total cost versus marginal cost Suppose a grocery store figures out that it costs $500 per week to hire a full time worker who can fill pickup orders. Create a table with room for 5 columns and 6 rows in your notes Use the top row for titles. The first (left) column should be titled Number of Workers and should have 0, 1, 2, 3, 4 as values. We're going to analyze whether the store should hire 0, 1, 2, 3 or 4 workers. Title the next column Total Cost (TC) and the third column Marginal Cost (MC). Put an X in the MC square corresponding to 0 workers. That would be the cost of going from negative 1 workers to 0 workers, let's leave it blank YOu'll see that marginal columns tend to start across from the first unit. We'll use the remaining columns later. What is the Marginal Cost per week of hiring the 4th worker? $500 O $1,000 O $1,500 $2,000What explains the shape of the average and marginal cost curves? Is it linked to any production relationships?Why is having a business objective of increased economies of scale always desirable?
- How does the impact of fixed costs change production decisions in the short run and in the long run? Use the average-total-cost (ATC) model to demonstrate this impact.Give an quantitative example of marginal and average cost.Why is economic cost known as opportunity cost? What are included in economic costs?
