Question
In: Economics
Why is the long-run average total cost (LRATC) curve called the planning curve? Illustrate.
Why is the long-run average total cost (LRATC) curve called the planning curve? Illustrate.
Solutions
Expert Solution
In short-A long run average cost curve is known as a planning curve. This is because a firm plans to produce an output in the long run by choosing a plant on the long run average cost curve corresponding to the output. It helps the firm decide the size of the plant for producing the desired output at the least possible cost.Using the name planning curve indicates that the long-run average cost curve is used to "making plans" especially concerning the desired scale of operations of a firm. Long-run cost curve is a planning curve because it is a guide to the entrepreneur to plan his output. Long-run average cost is derived fromshort-run cost curves.In long run, the average cost curve is derived by joining all the minimum points of average cost curves at different levels of production. It is also known by other names such as planing curve or envelope curve.It helps the firm decide the size of the plant for producing the desired output at the least possible cost...thank you
Rahul Sunny answered 2 years agoRelated Solutions
1 The short-run average total cost curve and the long-run average total cost curve are similarly...
1
The short-run average total cost curve and the long-run average
total cost curve are similarly shaped. What are the causes for the
short run and long-run average total cost curve to slope down and
up?
2 Mr. Salim has been working at a car manufacturing plant
forthe last 4 years. He recently lost his job due to the downsizing
of the company he works for due topoor car sales and poor economic
performance. What type of unemployment is Salim...
How can the long-run average cost (LRAC) curve be derived from the short-run average total cost...
How can the long-run average cost (LRAC) curve be derived from
the short-run average total cost (SRATC) curve?
How can the long-run average cost (LRAC) curve be derived from the short-run average total cost...
How can the long-run average cost (LRAC) curve be derived from
the short-run average total cost (SRATC) curve?
Describe economies of scale and diseconomies of scale.
What are the determinants of economies of scale and
diseconomies of scale, respectively?
Using a real-world company (other than Sysco), explain the
causes of economies of scale for your company.
How would economies of scale help your company compete in its
industry?
Describe how the long run average cost curve is an envelope of short run average cost...
Describe how the long run average cost curve is an envelope of
short run average cost curves.
Question 2 : A) The long-run average total cost curve shows: Select one: a. the plant...
Question 2 :
A)
The long-run average total cost curve shows:
Select one:
a. the plant size or scale that the firm should build.
b. the average total cost of producing where diminishing returns
are not present.
c. the lowest average total cost of producing every level of
output in the long run.
d. where the most profitable level of output occurs.
B)
The minimum efficient scale is the:
Select one:
a. smallest output level where fixed costs are minimised....
Draw a long run average cost curve, as well as several short run average cost curves...
Draw a long run average cost curve, as well as several short run
average cost curves if the firm has increasing economies of scale
followed by decreasing economies of scale.
In the long run, all costs are variable. Diagram and explain the long-run average cost curve...
In the long run, all costs are variable. Diagram and explain the
long-run average cost curve and what it means to have (i) economies
of scale, (ii) diseconomies of scale, and (iii) constants costs.
What factors contribute to these economies and diseconomies?
Draw a long-run average cost curve, carefully explain how it is derived, and explain why it...
Draw a long-run average cost curve, carefully explain how it is
derived, and explain why it has the shape that it has.
Please show me your thought process. Please explain it as if you
are telling it to someone who has no clue about economics.
A U-shaped long-run average total cost curve can be explained by firms increasing their factory size...
A U-shaped long-run
average total cost curve can be explained by firms increasing their
factory size to
(x) avoid coordination problems that occur when the factory is
large.
(y) take advantage of greater specialization.
(z) avoid fixed costs.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only
A business firm
produces and sells specialty cakes. Last year, the firm produced
12,000 cakes and sold each cake...
1. The long run average total cost shows what happens to average (per unit) total cost...
1. The long run average total cost shows what happens to average
(per unit) total cost as a firm grows in size (adds more capital or
increases its plant size). True or false?
2. In the short run, at least one input is variable and one
input is fixed. True or false?
3. If marginal product is less than average product, average
product must be falling. True or false?
4. In the long run, all inputs are variable. True or...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A neurologist needs to counsel a stroke victim and her husband about possible outcomes, treatment options,...
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
- 1: Competency framework usage is the modern best practice in management. What is meant by competency...
- A 19.34 g mixture of sugar (C12H22O11) and table salt (NaCl) is dissolved in 231 g...
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
- 1) Alternative compiled code sequence using instructions in classes A, B, C. What is the average...
- An asset is purchased on January 1 for $48,700. It is expected to have a useful...
ADVERTISEMENT