Answered: In the short-run, if the marginal cost…

In the short-run, if the marginal cost of a firm in a competitive industry is increasing while its average variable cost is downward sloping, what can you say about slope of average total cost?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 9P

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In the short run, if a marginal cost of a firm in a competitive industry is increasing while its average variable cost is upward sloping, what can you say about slope of average total cost?
In the short-run, if the marginal cost of a firm in a competitive industry is upward sloping while itsaverage variable cost is downward sloping, what can you say about slope of average total cost?
When do firms decide to shut down production in the short run? Explain it. How is the short run average cost curve and the long run average cost curve shaped? What is the difference between them?
Show the effect of diminishing returns on the marginal and average cost curves of a firm in the short-run. (be sure to explain your diagrams)
What happens to the average fixed cost, when the output of a firm increases.
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect the long-run average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Why will firms in most markets be located at or close to the bottom of the long-run average cost curve?
Are there fixed costs in the long-run? Explain briefly.
Consider Firm GM, a car manufacturer. Suppose you have some information regarding the cost curves of Firm GM: Output Average Cost ( at that output level) Marginal Cost of that Car 9,999 ? $ 12,000 10,000 $ 14,000 $ 11,500 19,999 $ 12,500 20,000 ? $ 12,600 Will the Average Cost of 9,999 cars be greater than $ 14,000 , less than $ 14,000, or can you not tell with the information given? ( Hint: it might help to draw a graph of AC and MC, and see if you can place units 9,999 and 10,000 on that graph). O Greater than $ 14,000 O Less Than $ 14,000 O Can't Tell with the information given
The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5
a) How do you derive the marginal cost (MC) curve of a firm?b) How are average variable cost (AVC) and marginal cost (MC) curvesrelated? Explain.