Explain how new technologies, which increase productivity, affect the average variable cost, average total cost, and...

Explain how new technologies, which increase productivity, affect the average variable cost, average total cost, and marginal cost curves.

Solutions

Expert Solution

New technologies which increase productivity will increase the total product, average product and the marginal product. Therefore the total product curve,the average product curve, and the marginal product curve will shift upward. New technologies increase the productivity and efficiency, therefore we can produce more output with the same amount of inputs. Therefore, the average variable cost, average total cost and marginal cost will decrease and the average variable cost curve, average total cost curve, and marginal cost curve will shift downward.

Usually the capital used by new technologies is more and the labor used by new technologies is less. This leads to an increase in the fixed cost and a decrease in the variable cost. At lower level of output the total cost increases and at higher level of output the total cost decreases. Therefore at lower level of output the average total cost curve moves upwards and at higher level of output the average total cost curve moves downwards.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Explain how an increase in technology, which increases the productivity of labor, will affect the labor...

Explain how an increase in technology, which increases the productivity of labor, will affect the labor market, the production function, and aggregate output. Provide graphs to illustrate.

Explain how an increase in the productivity of labour would affect the demand for labour in:...

Explain how an increase in the productivity of labour would affect the demand for labour in: (a) the short-run (b) the long-run.

An increase in total factor productivity will lead to which of the following? An increase in...

An increase in total factor productivity will lead to which of the following? An increase in the productivity of labor but not capital. A decrease in the productivity of capital, but not labor. An increase in the productivity of labor and capital. A decrease in the productivity of labor, but not capital.

Quantity Total Cost Total Fixed Cost Total Variable Cost Average Fixed Cost Average Total Cost Average...

Quantity Total Cost Total Fixed Cost Total Variable Cost Average Fixed Cost Average Total Cost Average Variable Cost Marginal Cost 0 30 1 75 2 150 3 255 4 380 5 525 6 680 7 840 8 1010 9 1200 Given the quantity and total cost, calculate for total fixed cost, total variable cost, average fixed cost, average total cost, average variable cost, and marginal cost. Excel formulas would be nice but not required.

Which of the following costs is always constant? a. average variable cost b. average total cost...

Which of the following costs is always constant? a. average variable cost b. average total cost c. average fixed cost d. none of the above

No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable...

No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable Cost $ Average Total Cost $ Marginal Cost$ 0 0 1 12 2 20 3 24 4 27 5 40 6 65 7 98 Assume that the fixed cost is $80, calculate the above costs in the table and explain the difference between average total costs and marginal costs. In a graph illustrate the Average Total Cost and Marginal Cost Curves, explain their relationship....

(a) Explain how the following changes will affect the total employment, average wage rate, labor productivity, and growth rate of the GDP of an economy.

(a) Explain how the following changes will affect the total employment, average wage rate, labor productivity, and growth rate of the GDP of an economy. (i) An increase in the labor force participation rate (ii) Growth in capital per worker accompanied by technological change Which of the above changes would contribute more toward a sustained high economic growth rate of an economy in the long run? (b) Suggest three government policies that can be used to raise the...

quantity of broomsticks fixed cost variable cost total cost average fixed cost average variable cost average...

quantity of broomsticks fixed cost variable cost total cost average fixed cost average variable cost average total cost marginal cost marginal product 0 10 $13 $38 22 $28 32 $70 41 $64 50 $110 59 $108 65 $133 70 $185 how do I fill in the blanks? as well as graph the three average cost curves and the marginal cost curve.

Units of Output (Q) Total Cost (TC) Total Variable Cost (TVC) Average Variable Cost (AVC) Average...

Units of Output (Q) Total Cost (TC) Total Variable Cost (TVC) Average Variable Cost (AVC) Average Fixed Cost (AFC) Marginal Cost (MC) 0 $120 $0 N/A N/A N/A 1 121 2 126 3 147 4 196 5 285 6 426 7 631 8 912 9 1,281 10 1,750 4. The following Table represents a firm’s short run costs. a. Complete the missing cells in the Table (10 points).

Marginal cost intersects average total cost and average variable cost

Marginal cost intersects average total cost and average variable costat a point depending on profit maximizing quantity.not enough information to answer.when they are increasing.at their lowest points.

Subjects