For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? A stock market crash lowers people’s wealth. Batelco increases the prices of mobile services. Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?

Q: Explain how a firm can have constant returns to scale in production and economies of scale in cost.

A: Constant Returns to scale refers to the situation where with the change in the production, the cost…

Q: Suppose there is a decrease in the demand for high-definition televisions.   What effect might this…

A: The demand curve shifts when there is a change in other factors other than price of commodity. If…

Q: Draw the MC and AVC curves and show graphically: (a) Shut-down price. (b) Short-run supply curve.…

A: The marginal cost refers to the additional cost incurred by a firm on producing an additional unit…

Q: Which of the following statements is true? the cost of producing output in the short run is always…

A: Short-run costs are the costs to a firm of producing different levels of output, with fixed and…

Q: You are the manager and selling your product in a perfectly competitive firm market. Your firm and…

A: Here, it is given that a firm operates its business in the perfectly competitive market with market…

Q: If a firm operates in a demand-driven market, then it should expect to face:   a. Massive…

A: The demand-driven market is a market that works according to the latest trends in the market.

Q: Average fixed costs of production will rise at a fixed rate as more is produced. appear as a…

A: In microeconomics, the average fixed expense is the fixed expenses associated with the production…

Q: The data below shows tabulation on the production of a hypothetical product. Output (Q) Total cost…

A: Total fixed cost (TFC): TFC is the cost that a firm must occur even when the quantity of output is…

Q: To maximize profit, a price taker will expand its output as long as the sale of additional units…

A: A market is a place where the buyers and the sellers interact with each other and the exchange of…

Q: significant economies of scale are present, large firms will be much more efficient producers than…

A: Economies of scale are the cost advantages by large firms due to the scale of production.

Q: You are the manager and selling your product in a perfectly competitive firm market. Your firm and…

A: Given C(Q) = 50 + 10Q + 2 Q2, MC = Change in Total Cost/ Change in Output      = 50 + 10Q + 2 Q2 / Q…

Q: The analysis of the production decision suggests that a profit-maximising firm should shut down…

A: The answer is - c. Price is less than minimum average variable cost at the profit maximizing output…

Q: With identical firms, constant input prices, and all the other characteristics of a competitive…

A: A shift in demand is the change the determinant of demand other than the prices. It is the situation…

Q: You are a manager of an advertising company. The company is running short of funds, so you decide to…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the following statements is the least likely to be true? A) Automation requiring…

A: Automation alludes to the course of naturally delivering products using robots, control frameworks…

Q: Short-run average total cost      shows the minimum average total cost for each level of output…

A: Answer: Correct option: option 4 (might have a flat portion that indicates a constant average cost…

Q: X and Y are factors of production. X's marginal product is 30 and Y's marginal product is 20. X=5…

A: Total cost is minimized when (MPx / Px) = (MPy / Py) Here, MPx / Px = 30/5 = 6 MPy / Py = 20 / 4 = 5…

Q: Explain why profit is greatest at this rate of output If fixed costs were $10 higher than those…

A: Producers objective is to maximize his or her profit . And The profit gets Maximized at the level of…

Q: Suppose a bakery’s fixed cost is the rent it pays for its location in a strip mall. Since firms have…

A: Fixed cost refers to those cost that are incurred without any production. In other words, fixed…

Q: Refer to the diagram above, in this instance, at the range of output represented a point c,…

A: TC and TR approach is one of the way to determine to profit maximized condition for the firm. In the…

Q: Productive efficiency means output (production) is produced in the long run at

A: A perfectly competitive market is the type of market structure in which several buyers and sellers…

Q: How does learning by doing affect average total costs? Short-run average total costs will remain…

A: Learning by doing is a process of achieving productivity through practice, innovations, and…

Q: The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost…

A: We can see that one of the axis we see the cost and profit is given, the verticle axis.Here, the…

Q: Assume a firm is trying to maximize output subject to a budget and is currently in the long run…

A: The long-run is the timeframe when all expenses are variable. The long-run relies upon the points of…

Q: The short run is a time period such that O the existing firms in the market do not have sufficient…

A: The short run is a time period such that the firms which are prevailing in the market don't have…

Q: Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are…

A: Demand is the absolute quantity of commodities for which the consumers are ready to purchase at…

Q: In the short run, the firm should continue to produce if and only if a.Price exceeds average total…

A: Total fixed cost is independent of output produced whereas  variable cost varies with the level of…

Q: A firm produces identical outputs at two different plants. If the marginal cost at the first plant…

A: The firm seeks to maximize the profit. The profit is maximized where the MR=MC. Firm can use its…

Q: Which of the following is correct if the firm described in Figure 7-4 decides to produce nothing?…

A: There are certain fixed costs that the firm has to incur even at 0 production level. Those costs are…

Q: 35) Long-run cost curves are U-shaped because A) of the law of demand. C) of economies and…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: A competitive firm produces output using three fixed inputs and one variable input. The firm’s…

A: A competitive firm minimizes cost by employing the number of input where its marginal product is…

Q: If the Marginal Cost for a product is found to be MC= 8x+60 , and the Marginal Revenue is given as…

A: The marginal cost(MC) is the cost of manufacturing one more unit of output(o/p). Whereas the…

Q: Do you think that the taxicab industry in large cities would be subject to significant economies of…

A: The economies of scale arise when a firm produces a large quantity because as the production…

Q: Which of the following represents a long-run decision for the firm? a. rehiring workers who were…

A: Long-run is the time period in which all the factors of production and all cost are variable.…

Q: In the short run, behavior of production is explained by Select one: a. The law of diminishing…

A: There are two kinds of periods faced by a business company based on the variability of its…

Q: Explain why marginal costs increase above some level of production in the short run.

A: The marginal cost is the additional cost incurred from producing one additional unit of goods and…

Q: Which of the following statements is CORRECT?   Question 17 options:   Short-run decisions are not…

A: There are various factors that affect the production. Some factors are variable and some are fixed.

Q: In the short run, a firm will produce a positive amount of output as long as _____ Group of answer…

A: In short run, the firm will produce the goods as long as the price greater than the average variable…

Q: True or False: For an increase in output, average costs change by more in the short-run than in the…

A: Average cost: The average cost for a firm can be defined as the cost incurred per unit of output for…

Q: A firm hires two workers and rents 15 acres of land for a season. It produces 150,000 bushels of…

A: Returns to scale state the effect on the output level due to the increase in the production inputs.