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Questions and Answers
What does the ATC1 curve represent?
What does the ATC1 curve represent?
- The ATC curve for a plant with 2 knitting machines
- The long-run cost of production
- The ATC curve for a plant with 1 knitting machine (correct)
- The diminishing marginal product of labor
How does the size of a firm's plant affect the ATC?
How does the size of a firm's plant affect the ATC?
- The smaller the plant, the lower the output at which ATC is at a minimum
- The smaller the plant, the greater the output at which ATC is at a minimum
- The larger the plant, the lower the output at which ATC is at a minimum
- The larger the plant, the greater the output at which ATC is at a minimum (correct)
What is implied by diminishing marginal returns to labor in a firm's production function?
What is implied by diminishing marginal returns to labor in a firm's production function?
- Long-run cost minimization
- Short-run U-shaped cost curves for MC, AVC, and ATC (correct)
- Decreasing returns to scale
- Increasing marginal returns to capital
How do diminishing marginal returns to capital affect a firm's cost curves?
How do diminishing marginal returns to capital affect a firm's cost curves?
In what way does plant variation influence short-run cost curves?
In what way does plant variation influence short-run cost curves?
What does ATC3 represent in the text provided?
What does ATC3 represent in the text provided?
How is the LRAC curve defined in the text?
How is the LRAC curve defined in the text?
What is the purpose of the LRAC curve according to the text?
What is the purpose of the LRAC curve according to the text?
What does the LRAC curve help the firm decide?
What does the LRAC curve help the firm decide?
How many knitting machines are required to produce 13 sweaters a day according to the text?
How many knitting machines are required to produce 13 sweaters a day according to the text?
What is the main difference between economies of scale and diseconomies of scale?
What is the main difference between economies of scale and diseconomies of scale?
What does minimum efficient scale refer to in the context of LRAC curve?
What does minimum efficient scale refer to in the context of LRAC curve?
What happens to long-run average cost as output increases in case of constant returns to scale?
What happens to long-run average cost as output increases in case of constant returns to scale?
If a firm moves beyond the minimum efficient scale output level, what might it experience?
If a firm moves beyond the minimum efficient scale output level, what might it experience?
How can a U-shaped LRAC curve help identify the minimum efficient scale output level?
How can a U-shaped LRAC curve help identify the minimum efficient scale output level?
What does the firm experience when the marginal product of a worker exceeds the marginal product of the previous worker?
What does the firm experience when the marginal product of a worker exceeds the marginal product of the previous worker?
Why does increasing marginal returns initially occur in production processes?
Why does increasing marginal returns initially occur in production processes?
What happens when the marginal product of a worker is less than the marginal product of the previous worker?
What happens when the marginal product of a worker is less than the marginal product of the previous worker?
Why do diminishing marginal returns eventually arise in production processes?
Why do diminishing marginal returns eventually arise in production processes?
Which factor leads to increased specialization and division of labor in production processes?
Which factor leads to increased specialization and division of labor in production processes?
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