EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 7.6, Problem 1MQ
To determine
To discuss the reason of SAC exceeding AC for all level of output except q*.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Given that TC=2000+100Q-10Q2+Q3 where Q is level of output and maximum level of MP is 15 units, answer the following question based on the given information.
A. Determine the TFC ,TVC,AVC,AFC,AC and MC functions
b. Calculate the level of output at which AVC and AC reaches its minimum
c Draw the relationship between production and cost curve and What relationship do you observe between production and cost curves? Why is this so?
G At 5 units AVC,APL is 10,what is the maximum APL?
I badly need help.
What is the intuition behind the assumption that production functions are characterized by diminishing marginal returns? Discuss and illustrate.
QUESTION
Given TC = 100 + 60Q – 12Q2 + Q3
find:
(a) The equations of the TVC, AVC, and MC functions.
(b) The level of output at which AVC and MC are minimum, and prove that the AVC and MC curves are U-shaped.
(c) Find the AVC and MC for the level of output at which the AVC curve is minimum
Chapter 7 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 7.1 - Prob. 1MQCh. 7.1 - Prob. 2MQCh. 7.1 - Prob. 1TTACh. 7.1 - Prob. 2TTACh. 7.2 - Prob. 1MQCh. 7.2 - Prob. 2MQCh. 7.2 - Prob. 1TTACh. 7.2 - Prob. 2TTACh. 7.3 - Prob. 1MQCh. 7.3 - Prob. 2MQ
Ch. 7.3 - Prob. 3MQCh. 7.3 - Prob. 1TTACh. 7.3 - Prob. 2TTACh. 7.5 - Prob. 1TTACh. 7.5 - Prob. 2TTACh. 7.6 - Prob. 1MQCh. 7.6 - Prob. 2MQCh. 7.6 - Prob. 3MQCh. 7.6 - Prob. 1.1MQCh. 7.6 - Prob. 2.1MQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQCh. 7 - Prob. 7.1PCh. 7 - Prob. 7.2PCh. 7 - Prob. 7.3PCh. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Prob. 7.8PCh. 7 - Prob. 7.9PCh. 7 - Prob. 7.10P
Knowledge Booster
Similar questions
- what are the two distinct input bundles (P, W) in the diagram which give q = 48?arrow_forwardExercises 47-50 describe a number of business ventures. For each exercise, a. Write the cost function, C. b. Write the revenue function, R. c. Determine the break-even point. Describe what this means. 47. A company that manufactures small canoes has a fixed cost of $18,000. It costs $20 to produce each canoe. The selling price is $80 per canoe. (In solving this exercise, let x represent the number of canoes produced and sold.) 48. A company that manufactures bicycles has a fixed cost of $100,000. It costs $100 to produce each bicycle. The selling price is $300 per bike. (In solving this exercise, let x represent the number of bicycles produced and sold.) 49. You invest in a new play. The cost includes an overhead of $30,000, plus production costs of $2500 per performance. A sold-out performance brings in $3125. (In solving this exercise, letxrepresent the number of sold-out performances.) 50. You invested $30,000 and started a business writing greeting cards. Supplies cost 2¢ per card…arrow_forwardSuppose that for a company manufacturing calculators, the cost, revenue, and profit equations are given by x² C = 70,000 + 30x, R=200x - A) Costs are increasing at the rate of $ (Simplify your answer.) where the production output in 1 week is x calculators. If production is increasing at a rate of 600 calculators per week when production output is 5,000 calculators. Find the rate of increase (decrease) in cost, revenue, and profit. B) Revenue is decreasing at the rate of $ (Simplify your answer.) C) Profits are (Simplify your answer.) 20 at the rate of $ P=R-C per week at this production level. per week at this production level. per week at this production level.arrow_forward
- Consider a firm that produces widgets according to the following Cobb-Douglas production function: Q = A * L^α * K^β where: Q is the quantity of output, L is the quantity of labor, K is the quantity of capital, A is a scale parameter (total factor productivity), α and β are the output elasticities of labor and capital respectively. Given that A = 1, α = 0.6, β = 0.4, L = 16 and K = 9, a) Calculate the quantity of output Q. b) If the firm increases the quantity of labor (L) to 20 while keeping the quantity of capital (K) constant, what will be the new quantity of output?arrow_forwardA company produces commercials. A 2-minute commercial, for example, needs exactly 5 minutes of filming and 8 minutes of editing. Let x1 denote the minutes of filming and x2 denote the minutes of editing. a) Write down the production function and state whether it has increasing, constant, or decreasing returns to scale b) Suppose that filming costs $45 per minute and editing costs $10 per minute. To produce a 5-minute commercial, how many minutes of filming and how many minutes of editing is needed to minimize cost? c) Suppose that filming costs w1 per minute and editing costs w2 per minute. Let y denote the length (in minutes) of commericals produced. derive the conditional factor demand functions x1(w1,w2,y) and x2(w1,w2,y) and its cost function c(w1,w2,y)arrow_forwardWhat is meant by an expansion path? Illustrate expansion paths for a normal input and an inferior input.arrow_forward
- Question: Orla manages a loom that produces flags (F) using thread (T) and dye (D) as inputs. Herproduction function is given by: Q(T,D) = (T1/2 D1/2)1/2*For this problem, assume F, T, and D are infinitely divisible so you don’t need to worryabout restricting to whole-number answers. a.) Does Orla’s production function exhibit increasing, constant, or decreasing returns toscale? Explain. b.) Set up Orla’s cost-minimization problem to find the lowest-cost combination of inputsrequired to produce a specific level of output (bar Q) given factor prices PT and PD. (Note: You can write this either as a minimization subject to constraints or in Lagrangian form. *You do not need to solve it.)arrow_forward|4GE 10:01 2.2 Modeling with Linear F... edfinity.com TAMU_QID: BM_00049 A company finds the total cost of producing 45 items is $9,450, while they can produce 85 items for a total cost of $13,250. They have a revenue of $7,150 when selling 65 items. Enter all answers below using exact numbers, and write any equations in slope-intercept form. a. Find the production cost per item: b. Find the company's linear profit function: P(x) = Submit answerarrow_forwardGiven the total cost function TC = 0.5q³ — 10q² + 80q ● Find the average cost AC and the marginal cost MC • At what level of output is average cost at a minimum? Verify using the second-order derivative test. • At what level of output is marginal cost at a minimum? Verify using the second-order derivative test.arrow_forward
- 5. The annual output for a luxury hotel chain is given by Q = 30K²/5 L¹/2 R¹/4, where K, L and R are the capital, labor and real estate inputs, all measured in $1,000,000 s, and Q is the average number of rooms rented per day. The hotel chain's annual budget is B = $69 million. (a) How should they allocate this budget to the three inputs in order to maximize their annual output? What is the maximum output? (b) What is the approximate change in the firm's maximum output if their annual budget increases by $500,000? Explain your answer.arrow_forwardAssume that a firm called Anonymous of Toronto decides to increases all of its inputs by 20 percent and as a consequence its output increases by 25 percent, thenarrow_forwardFor an increase in output, average costs change by more in the short run than in the long run, but for a decrease in output, the opposite is true. Explain why the above statement is True, False, or Uncertain according to economic principles. Use diagrams where appropriate.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning