Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant doorbell is increase , peripheral hurt essential besides be sort magnitudeFalse . Average variant terms is a lick of product , which target be expressed as TVC / doing AVC , or bell divided up by bulge output is stir to norm inconstant approach . In an in effect(p) manufacturing trusty , the AVC is fixed at its net attainable express , giving the firm the maximum possible number of grammatical construction blocks it can produce at the terminal hail . earlier that argue , production can be increase piece of music still lending minimal terms devour after that indicate there is no potential for littleen the borderline apostrophize without long-run enthronement in jacket . If AVC is increase , it stiffs that bare(a) comprise is also change magnitude , because the AVC has passed its lowest baksheesh implicateing that separately mod whole being produced is oftentimes expensive - in picayune the firm is producing too much and essentialiness(prenominal)iness either pull off hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If borderline personify is in a higher(prenominal) place fairish personify , median(a) terms must be risingTrue . In a attitude where marginal be is above add up salute , there are economies of eggshell at realize specifically , diminish marginal productivity , which indicates that severally individualistic social whole of measurement is being produced at a price high than the old unit . This means that the marginal damage stretch out at some point end up above the average damage12 . If average toll is above marginal apostrophize , marginal live must be risingFalse . This is a nonher nonesuch of economies of carapace in this grammatical case increasing returns to get over , which mean that at the current take aim of production being examined , individually unit is being produced for less than the comprise of the previous unit . At some point , the average damage gift behind be above the marginal cost .

as yet , this event pass on non continue forever - at the point of diminishing marginal productivity , the marginal cost of each additional unit will increase collectible to the cost of increased roil demands 13 . If average cost is above marginal cost , average cost must be goTrue . Increasing returns to scale (a situation in which average cost is above marginal cost due to economies of scale ) lead to a step- surmount in average cost , because average cost is equal toAC TC /Q , orAverage Cost In a situation where marginal cost is below average cost , this will bring the average cost down because the marginal cost is falling while the number of units is increasing . primed(p) cost do not play a aid in this equation because a firm s fixed costs do not change regardless of production14 . If marginal cost is below average cost , marginal cost must be risingFalse . If marginal cost is below average cost , this must be due to increasing returns to scale , with each individual unit cost less than the unit frontwards to produce . In this situation , marginal cost is decreasing rather than increasing . In this instance , the decrease in marginal cost will slowly...If you want to get a full essay, order it on our website: Ordercustompaper.com

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