18. Consider the diagram at the right of SRATC and LRAC curves. The SRATC curve is...
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18. Consider the diagram at the right of SRATC and LRAC curves. The SRATC curve is drawn for a given plant size. a. Given a plant size associated with SRATC, the level of output that minimizes short-run average costs is (1) Unit costs in the short run at this level of output are (2) b. Given a plant size associated with SRATC, the level of output that is optimal in the long run is in the short run at this level of output are (4) c. Explain the economics of why c is greater than c. C is associated with the (5) Unit costs Cost per Unit ($) C3 1 while c is associated with the (6) The point that has a unit cost CA C2 where the firm can take advantage of of c4 corresponds to a curve that is associated with (7) (8) of scale. d. Suppose the firm wants to increase output to Q2 in the short run. Unit costs in the short run would be (9) This can be accomplished by (10). SRATC LRAC QoQ1 Q2 Output e. Suppose the firm wants to increase output to Q2 in the long run. Unit costs would be (11). accomplished by (12). This can be (1) (2) C2 (3) (4) (5) long run short run (6) short run long run (7) more labour better technology (8) economies diseconomies (9) Co 02 a larger plant 01 C3 02 C3 (12) increasing labour increasing plant size improving technology + (10) increasing plant size increasing labour improving technology (11) OC C3 01 18. Consider the diagram at the right of SRATC and LRAC curves. The SRATC curve is drawn for a given plant size. a. Given a plant size associated with SRATC, the level of output that minimizes short-run average costs is (1) Unit costs in the short run at this level of output are (2) b. Given a plant size associated with SRATC, the level of output that is optimal in the long run is in the short run at this level of output are (4) c. Explain the economics of why c is greater than c. C is associated with the (5) Unit costs Cost per Unit ($) C3 1 while c is associated with the (6) The point that has a unit cost CA C2 where the firm can take advantage of of c4 corresponds to a curve that is associated with (7) (8) of scale. d. Suppose the firm wants to increase output to Q2 in the short run. Unit costs in the short run would be (9) This can be accomplished by (10). SRATC LRAC QoQ1 Q2 Output e. Suppose the firm wants to increase output to Q2 in the long run. Unit costs would be (11). accomplished by (12). This can be (1) (2) C2 (3) (4) (5) long run short run (6) short run long run (7) more labour better technology (8) economies diseconomies (9) Co 02 a larger plant 01 C3 02 C3 (12) increasing labour increasing plant size improving technology + (10) increasing plant size increasing labour improving technology (11) OC C3 01
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Related Book For
Microeconomics
ISBN: 978-0321866349
14th canadian Edition
Authors: Christopher T.S. Ragan, Richard G Lipsey
Posted Date:
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