Why does the short-run MC curve cut both the ATC and AVC curves at their minimum points?
Answer to relevant QuestionsWhy should the production of a fixed amount of output be allocated between two production activities so that the marginal cost is the same in each?A firm finds that no matter how much output it produces and no matter how input prices vary, it always minimizes its costs by buying half as many units of capital as of labor. Draw this firm’s isoquant map.A firm purchases capital and labor in competitive markets at prices of r = 6 and w = 4, respectively. With the firm’s current input mix, the marginal product of capital is 12 and the marginal product of labor is 18. Is ...True or false: In a constant- cost industry, a tax of a constant, fixed amount on each unit of output sold will not affect the amount of output sold by a perfectly competitive firm in the long run. Explain.The marginal and average cost curves of taxis in Metropolis are constant at $0.20/ mile. The demand curve for taxi trips in Metropolis is given by P = 1 - 0.00001Q, where P is the fare, in dollars per mile, and Q is measured ...
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