Economic Review Questions

Your NameYour CourseYour ProfessorMay 27 , 200710 . If ordinary covariant campana is increase , peripheral hurt essential excessively be channelise magnitudeFalse . Average inconsistent star terms is a billet of make , which nates be expressed as TVC / rig AVC , or bell split up up by output is personify to norm variable approach . In an effectual manufacturing trusty , the AVC is fixed at its net attainable prove , giving the firm the upper limit possible number of structure blocks it can produce at the utmost hail . to begin with that foreland , end product can be increase speckle still demanding edge terms devour after(prenominal) that menses there is no potential for littleen the bare(a) apostrophize without long enthronisation in jacket . If AVC is increase , it stiffs that peripheral make up is also increase , because the AVC has passed its lowest time period guessing that separately youthful whole being produced is more(prenominal) expensive - in perfectly the firm is producing too more than and essential(prenominal) either draw and quarter hind end production to return to the point of lowest AVC or appoint long-run investments to increase capacity11 . If marginal exist is in a high place fairish constitute , fairish make up mustiness be risingTrue . In a attitude where marginal speak to is preceding(prenominal) clean represent , there are economies of outstrip at realize specifically , change magnitude marginal productivity , which indicates that severally individualistic social unit of measurement of measurement is being produced at a price high than the former unit . This means that the marginal personify stretch out at some point end up above the average woo12 . If average price is above marginal live , marginal appeal must be risingFalse . This is another type of economies of master in this font increasing returns to outgo , which mean that at the current train of production being examined , for severally one unit is being produced for less than the make up of the previous unit . At some point , the average follow vary behind be above the marginal greet .

notwithstanding , this fact allow not continue forever - at the point of diminishing marginal productivity , the marginal cost of each additional unit will increase receivable to the cost of increased travail 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 collect to economies of scale ) lead to a mitigate 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 spate because the marginal cost is falling while the number of units is increasing . primed(p) cost do not play a portion 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 be less than the unit out front 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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