Exam 8: Costs and the Changes at Firms Over Time

Draw typical average total cost, average variable cost, and marginal cost curves for a competitive firm with price at the shutdown point. Show that total revenue equals variable costs at this quantity. Also show the firm's losses at this quantity.

Exhibit 8-5 -Refer to Exhibit 8-5. The curve marked I is the firm's

Long-run average cost and short-run average cost curves have their U-shapes for the same reasons.

Exhibit 8-11 -Economies of scale can exist in both the short run and the long run.

Average total cost is equal to marginal cost when

Fixed cost does not vary with the quantity of output that a firm produces.

If the average score of the first two exams is 85 and the score of the third exam is lower than 85, then the average score of all three exams must be lower than 85.

Exhibit 8-3 -Both fixed cost and average fixed cost do not decline as the quantity of output increases.

Exhibit 8-5 -If average fixed cost is falling with increasing output, then

The marginal cost curve intersects the average total cost curve at the lowest point of the average total cost curve.

Capital expansion causes the average total cost to decrease at low levels of output but increase at high levels of output.

Exhibit 8-2 -Refer to Exhibit 8-2. At an output quantity of 3 units, the variable cost is

Exhibit 8-5 -Refer to Exhibit 8-5. At an output level of K,

Exhibit 8-2 -Refer to Exhibit 8-2. The marginal cost of producing the sixth unit of output is

An isocost line has a

Fixed costs exist

When marginal cost is greater than average variable cost but less than average total cost,

Suppose one firm buys cattle to process only the skins for leather, and another firm buys cattle to process only the meat for food. If the two firms merged, they would experience

Are there economies of scale for a waiter serving customers in a restaurant? What economies of scale are realized if party sizes increase? Is there a maximum party size beyond which scale diseconomies are experienced?

Consider the relationship between the average test score of a class and one student's test score. Suppose there are 10 students with an average test score of 80. Suppose the marginal score is the test score of a new student, Kelly.