This cost structure is accounted for by the law of Variable Proportions. Each firm distinguishes its product from that of its competitors. Oligopolistic firms may be any size. For the short run curve the initial downward slope is largely due to declining average fixed costs. This firm should shut down now. Microeconomics Exam Answers Macroeconomics Exam Answers Below is a compiled list of economics exam answers and quiz answers.
The goal of a monopolistically competitive firm is to A. Refer to the above data. The diminishing returns effect : the larger the output, the greater the amount of variable input required to produce additional units leading to higher average variable cost. The marginal cost of producing the sixth unit of output is: A. It first declines, reaches a minimum at Q 3 units of output and subsequently rises.
Refer to the above diagram. If a monopoly practices perfect price discrimination, it will A. Total product curve shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input. As new firms enter the industry, the market price will drop. For example, rising material or shipping costs may alter the ideal point.
In the short run, the firm seeks to maximize profit; it the long run it seeks to minimize cost. Thus average variable cost has to fall. When a monopolist increases production, the quantity effect will tend to increase total revenue and the price effect will tend to decrease total revenue. A perfectly competitive and productively efficient firm organizes its in such a way that the factors of production is at the lowest point. . The way to minimize this loss is to stay in business, at least for the duration of the short run. The firm faces a downward-sloping demand curve.
There are too many firms in perfect competition to allow for collusion. The average total cost of producing 3 units of output is: A. Public ownership serves largely the same function as does regulation. Refer to the above data. In the long run, the firm can change the size of the plant.
Long-run average cost first declines, reaches a minimum at Q 2 in Fig. To aid in the process, Economics Wiki also offers Economics News to demonstrate the impact different decisions have on the local, national and global economy. The slope of the variable cost function is marginal costs. Related Discussions:- What is the minimum cost of producing each level of output, Assignment Help, Ask Question on What is the minimum cost of producing each level of output, Get Answer, Expert's Help, What is the minimum cost of producing each level of output Discussions Write discussion on What is the minimum cost of producing each level of output Your posts are moderated. Likewise, if she produces 9 cases putting her at point Y and expects to continue this for a long time, she will increase her fixed cost in the long run and move to point X. In what way does the spreading effect change average total cost as output rises? In the classic prisoners' dilemma with two accomplices in crime, the Nash equilibrium outcome is one in which A.
Finally, we illustrate the obtained results with an example. The cost of having purchased the equipment will not change with the frequency of its use. She can minimize her losses by shutting down her operations now. Successful tacit collusion is most likely to arise among oligopolistic firms when A. For the perfectly competitive firm, economic profit equals A. This initial downward slope occurs because a firm that employs only a few workers often cannot reap the benefits of specialization of labor. To the right of the firm's minimum-cost output, average total cost increases.
Monopoly is a type of A. A firm will choose to shut down in the short run when A. Net gains to the firm are maximized when the firm produces at the point where marginal revenue equals marginal cost. In long run equilibrium, a monopolistically competitive firm is producing at a point on its average total cost curve where A. And at output greater than the minimum-cost output, marginal cost is greater than average total cost and average total cost is rising.
The total variable cost of producing 5 units is 11. As labor input increases, output also rises, and the extent of the increase in reflected in the slope of the curve. In fact, management is an indivisible input which is not capable of continuous variation. Economies of Scale : Various factors may give rise to economies of scale, that is, to decreasing long-run average costs of production. The firm faces a downward-sloping marginal revenue curve. If marginal cost is below average total cost, average total cost is falling. For a monopolistic competitor, price will exceed marginal cost.
Successful tacit collusion is most likely to arise among oligopolistic firms when A. If marginal cost is less than average total cost, an increase in output must reduce average total cost, as in the movement from A1to A2. In oligopoly, all firms sell an identical product; but in perfect competition, the product varies between producers. The long-run industry supply for synthetics is horizontal. Which of the following would be an example of a monopolistically competitive industry with differentiation by style or type? A purely competitive seller is: A.