Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 4, Problem 5MC
To determine
The determining factors to establishing an extra factory by a clothing factory manager.
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Students have asked these similar questions
1. How does fixed cost affect marginal cost? Why is this relationship important?
2. Is it possible for total utility to increase while marginal utility diminishes? Explain.
3. Define economies of scale and explain why they might arise. Define disecononies of scale and explain why they might arise.
Problem Solving
a.
Compute the average cost and marginal cost
Units of output
Total Cost
Average Cost
Marginal Cost
30
40
55
75
100
130
165
b. Plot in a graph the average cost and the marginal cost.
c. What is the efficient production of the firm? Explain its implication if the firm
produce more than its efficient output.
Write a word or term that governs the following
1.
are benefits given to the firm that originate from outside the firm.
2.
exist when costs fall with larger size firm for technical and
engineering reasons.
3.
result from the way that larger firms can employ specialized
workers.
Chapter 4 Solutions
Managerial Economics: A Problem Solving Approach
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