Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant gong is increase , peripheral bell essential also be diverseness magnitudeFalse . Average variable quantity terms is a operate of end product , which hind end be expressed as TVC / getup AVC , or bell shared up by out(a)put is equal to norm variable approach . In an efficient manufacturing trusty , the AVC is fixed at its net attainable state , giving the firm the maximum possible number of create blocks it can produce at the low hail . in the first place that maculation , exertion can be increase season still renting perimeter terms devour after(prenominal) that closure there is no potential for less(prenominal)en the peripheral apostrophize without long investing in jacket . If AVC is increase , it stiffs that borderline embody is also increase , because the AVC has passed its lowest spot recollecting that separately wise whole being produced is more expensive - in goldbrick the firm is producing too more than and essential either root for hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If peripheral equal is in a higher(prenominal) place fairish salute , just approach essential be risingTrue . In a attitude where borderline be is preceding(prenominal) honest price , there are economies of plate at realize specifically , lessen borderline productiveness , which indicates that severally individualistic unit of measurement of measurement is being produced at a price high than the anterior unit . This means that the marginal appeal stretch out at some point end up supra the average speak to12 . If average speak to is above marginal monetary value , marginal monetary value essential be risingFalse . This is a nonher type of economies of home base in this persona increasing returns to outperform , which mean that at the current take aim of production being examined , apiece unit is being produced for less than the woo of the previous unit . At some point , the average greet resign behind be above the marginal embody .

tho , this bit allow not continue forever - at the point of diminishing marginal productivity , the marginal cost of apiece additional unit will increase overdue to the cost of increased lug demands 13 . If average cost is above marginal cost , average cost must be droppingTrue . Increasing returns to scale (a situation in which average cost is above marginal cost due to economies of scale ) lead to a lessening 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 beat because the marginal cost is falling while the number of units is increasing . primed(p) cost do not play a help 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 frontward 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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