Question

In: Economics

5. Explain why Marginal Cost will initially decline and then increases as the number of products...

5. Explain why Marginal Cost will initially decline and then increases as the number of products produced increases.

6. Explain why Average Total Cost will initially decline and then increases as the number of products produced increases.

7. Explain why Average Fixed Cost only declines as the number of products increases.

8. Explain how Long-Run Average Total Cost is determined

9. Provide reasons why Long-Run Average Total Cost would decline, stay constant, and increase.

10. Give at least 2 reason why a firm would achieve Economy to Scale.

Solutions

Expert Solution

Summary:

(5) Due to Law of diminishing returns and economies of scale

(6) Due to Law of variable proportions

(7) Because fixed costs are constant

(8) LAC curve is the envelope of SAC curves

(9) Due to returns to scale

(10) Due to managerial improvements and technological advancements

Rahul Sunny answered 2 years ago
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