Write TRUE or FALSE in the space provided. 1. Diseconomies of scale are the benefits that firms gain from the ongoing growth of the organisation. 2. When long run average cost is rising, the firm is experiencing diseconomies of scale. 3. As the firm employs more labour, greater division of labour is possible. 4. Division of labour leads to reduce productivity and increased output 5. Internal economies of scale are benefits to the firm that originate from the organisation itself.
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- Define economies of scale and explain why they might arise. Define diseconomies of scale and explain why they might arise.1. Evaluate the view that the main goal of firms will always be cost minimization. 2. You are interested in starting a used car dealership in your country. Provide examples with explanations of implicit cost and sunk costs related to this business. 3. Suppose you are a producer of motor vehicles, explain with the use of examples the difference between the following concepts: diseconomies of scale and constant returns to scale.Quantity 1 Firm A Firm B Firm C A B 2 3 10 21 32 10 15 18 10 19 28 C F2 Indicate whether each firm experiences economies of scale or diseconomies of scale. (Note: and diseconomies of scale in another, make sure to select both columns.) Firm Economies of Scale Diseconomies of Scale # 4 43 23 37 000 80 F3 5 Q F4 or 6 7 54 66 80 35 50 65 46 55 60 9 F5 ree different firms: MacBook Air F6 B F7 DIL F&
- 1.Explain how the marginal product of labor and marginal cost are related? Draw one graph for MPL (quantity of workers on x axis) and another for MC (quantity of output on x axis) that displays this relationship. 2. Explain what happens to average total costs when marginal cost is greater than average total costs? 3.Draw a precise graph that shows the following short-run cost curves: MC and ATC 4.Add the following to your graph from 3: AVC & AFC (pay particular attention to i) the starting points of these curves and ii) how these curve change relative to MC and ATC as output quantity increases). 5.Bonus: What happens to the difference between ATC and AVC as quantity increases? Why?Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Loblaws Supermarket is produced by the following production process: Fulton Family Farm grows "popcorn" corn and sells it to DeLux Popcorn. DuLux Popcorn then seasons and packages the popcorn, selling it to retailers like Loblaws. The retailers represent the final stage of production, selling jars of DeLux brand popcorn to its customers. Name of Company Revenues Cost of Purchased Inputs Fulton Family Farm $0.50 DeLux Popcorn $2.50 $0.50 Loblaws Supermarket $4.00 $2.50 a.) What is the value added by Loblaws Supermarket in producing a jar of popcorn? [ Select ] b.) Which firm contributes the greatest added value to the jar of popcorn? [ [ Select ] c.) Assume that Fulton Family Farm grows its corn in Canada and Loblaws Supermarket is a Canadian grocery store chain. However, DeLux Popcorn creates popcorn at its Buffalo, NY facility in the United States. If all of the production steps occurred in the same year, each jar…Assume that with 20L and 30K a given firm can produce 100 units of output and with 40L and 60K it can produce 175 units (where L and K denote the labor and capital inputs). Based on this information, we can conclude that: a. decreasing returns to scale exist. b. average cost is decreasing. c. average cost is constant. d. increasing returns to scale exist.
- The table below gives the long run cost data for producing computers. Find the long run average total cost of producing each unit, then determine if there are Economies of Scale, Constant Returns to Scale or Diseconomies of Scale at select quantities. Which describes our situation when quantity increases from 2 to 3? OEconomies of Scale ODiseconomies of Scale OConstant Returns to Scale What about when quantity increases from 3 to 4? OEconomies of Scale ODiseconomies of Scale OConstant Returns to Scale Quantity Long run Total Cost in $ Long run Avg Total Cost in $ 0 8 1 2 3 4 5 28 47 67 96 < Previous 138What are diseconomies of scale? Diseconomies of scale is A. when the marginal product of labor is decreasing with output. B. when the marginal cost of production is increasingwith output. C. when a firm's long-run average costs decrease with output. D. when a firm's long-run average costs increase with output.The production engineers at Impact Industries have derived the expansion path shown in the following figure. The price of labor is $100 per unit. a. What price does Impact Industries pay for capital? b. If the manager at Impact decides to produce 180 units of output, how much labor and capital should be used in order to minimize total cost? c. What is the total cost of producing 120, 180, and 240 units of output in the long run? d. Impact Industries originally built the plant (i.e., purchased the amount of capital) designed to produce 180 units optimally. In the short run with capital fixed, if the manager decides to expand production to 240 units, what is the amount of labor and capital that will be used? (Hint: How must the firm expand output in the short run when capital is fixed?) e. Given your answer to part d, calculate average variable, average fixed, and average total cost in the short run.
- The production engineers at Impact Industries have derived the expansion path shown in the following figure. The price of labor is $100 per unit. a. What price does Impact Industries pay for capital? b. If the manager at Impact decides to produce 180 units of output, how much labor and capital should be used in order to minimize total cost? c. What is the total cost of producing 120, 180, and 240 units of output in the long run? d. Impact Industries originally built the plant (i.e., purchased the amount of capital) designed to produce 180 units optimally. In the short run with capital fixed, if the manager decides to expand production to 240 units, what is the amount of labor and capital that will be used? (Hint: How must the firm expand output in the short run when capital is fixed?) e. Given your answer to part d, calculate average variable, average fixed, and average total cost in the short run. Note: Please answer d and e20 15 LRAC 10 10 15 20 25 30 Quantity (units per hour) 1. In the above figure, the long run average cost LRAC, between 0 and 10 units per hour what does the firm exhibit (Economies of scale, Diseconomies of scale or constant return to scale)? 2. In the above figure, the long run average cost LRAC, between 10 and 20 units per hour what does the firm exhibit (Economies of scale, Diseconomies of scale or constant return to scale)? 3. In the above figure , the long run average cost LRAC, between 20 and 30 units per hour what does the firm exhibit (Economies of scale, Diseconomies of scale or constant return to scale)? В I Cost (dollars per unit)22. What does the Long Run Average Cost curve depict? a) It depicts the relationship between Average (Total) Cost and quantity produced when at least one input is fixed b) It depicts the relationship between Average (Total) Cost and the scale of operation in the long run c) Both a) and b) are true d) Neither a) nor b) is true 24. Assume that you start your own business producing clay pots and hire workers to start production. The first worker produces 20 clay pots a day, and when your hire the second worker, total production increases to 48 clay pots a day. What is the marginal product of labour for the second worker? a) 20 b) 28 c) 68 d) 34