Exam 6: Economies of Scale and Scope

Average costs_____ initially due to the presence of fixed costs and then _____due to increasing marginal costs​

​The marginal cost curve:

When a firm is experiencing decreasing marginal costs,it could be because​

​After sugar refiner has produced fine sugar for baking purposes,what is left over is used to produce molasses.This technology exhibits

​When there are economies of scale,

​Ray's Radios believed the synergies between radio production and battery production could be realized if he expanded.However,due to overseeing the battery expansion Ray devoted less time to the radio business leading to the radio unit costs increasing.At this point,Ray's Radios should

​If long run average costs fall with output,you have

​A firm experiencing constant economies of scale will have a long-run average cost curve that is:

​If your long-run costs exhibit increasing returns to scale,securing big orders leads you to

​It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries.If Firm A merges with firm B,it can produce both the five radios and the five batteries for $1000.The firm has experienced

Swing shift Your firm prints the novelty baseball cards that candy makers include in their bubblegum.Since you regularly sell 100,000 cards per week,you invested in four separate production lines that can each produce 25,000 cards in a standard 40 hour work week.Now a few of the candy makers are increasing their orders so that you will need to produce 150,000 cards per week,at least temporarily.If you produce these cards by adding a swing shift from 4pm to midnight,you will have to pay workers time and a half.What does this imply for the shape of your short-run marginal cost curve? What does it imply for your pricing?

​If long run average costs are constant with respect to output,you have

A firm could experience diseconomies of scale if​

If marginal costs fall below average cost,average cost must be

Expansion Your firm prints the novelty baseball cards that candy makers include in their bubblegum.Since you regularly sell 100,000 cards per week,you invested in four separate production lines that can each produce 25,000 cards in a standard 40 hour work week.Now a few of the candy makers are signed long term contract that will increase their orders so that you will need to produce 150,000 cards per week.If you can invest in two new production lines at the same cost as your previous four,what does this imply for the shape of your long-run marginal cost curve? What does it imply for changes in your pricing?

​Ceramics The ArtHaus by Antonia continually introduces new pattern of ceramic plates periodically.She can produce a batch of 1,000 potentially useable units per week.However,between the shaping,firing,painting,and glazing,many are discovered to be flawed through the process and must be discarded.However,Antonia can determine where the more common flaws develop and adjust the production process to eliminate these.Her yield rate for the initial batch is usually 60%,but increase by 2% with each additional batch up to 100%.What best describes her cost schedule? How many batches does it take her to reach 10,000 units? 20,000 units?

​Diseconomies of scale are also known as

​A falling average cost implies that

When a firm's marginal productivity declines as output increases,then the firm is experiencing​

​All of these could be sources of economies of scale except