Between average total cost and average variable cost

Assignment Help Business Economics

Reference no: EM13831221

(a) State whether the following statements are true or false. Briefly explain your answers.

(i) The gap between average total cost (ATC) and average variable cost (AVC) becomes larger when output increases.

(ii) Marginal cost curve cuts the lowest point of the average cost curve.

(b) Suppose carrots are bought and sold on a competitive market. Assume that the market is in equilibrium and that the economic profits of existing farms are zero. If the price of cabbage (a close substitute of carrot) drops,

(i) Discuss the short-run effects on the market and individual farms of carrots in terms of price, quantity and profits.

(ii) What will be the long-run effects on the market and individual farms of carrots in terms of price, quantity and profits?

Reference no: EM13831221

Questions Cloud

Explain the economics of the taxi medallion system : Explain the economics of the taxi medallion system. This is discussed in the text and in numerous places on the web. Why did cities start the medallion system? Do you think it is a good idea? Explain the economics of the ride-sharing firms such as Ub..

How can patent encourage invention : Explain the following practice/policy in terms of externalities. Charitable donation over HK$100 is tax deductible in Hong Kong. Why are some of the products, such as gasoline, taxed more heavily than other goods such as food? Explain your answer in ..

How does technological progress shift labour demand curve : Suppose both product and factor markets are competitive, why is the labour demand curve downward sloping? How does technological progress shift the labour demand curve? Professors, lawyers and doctors receive similar amounts of education, why are pro..

Suppose both product and factor markets are competitive : Suppose both product and factor markets are competitive, why is the labour demand curve downward sloping? How does technological progress shift the labour demand curve? Professors, lawyers and doctors receive similar amounts of education, why are pro..

Between average total cost and average variable cost : The gap between average total cost (ATC) and average variable cost (AVC) becomes larger when output increases. Marginal cost curve cuts the lowest point of the average cost curve.

Indicate changes in consumer surplus and producer surplus : What will happen to the equilibrium price and quantity of hairy crabs if: Use a diagram to show the tax burden on buyers and sellers and briefly explain your answer. (ii) use a separate diagram to indicate the changes in consumer surplus and producer..

Discuss the provisions of the securities act : Discuss the provisions of the Securities Act of 1934 with particular emphasis on the concept of insider trading.

What is the total investment in the new machine : The Cosmo K Manufacturing Group currently has sales of $1,400,000 per year. It is considering the addition of a new office machine, which will not result in any new sales but will save the company $105,500 before taxes per year over its 5-year useful..

What will happen to the equilibrium interest rate : Explain using the money market graph, what happens when (1) the price level (CPI) goes up, (2) when the discount rate is lowered and (3) when the Fed sells more bonds on the market. What will happen to the equilibrium interest rate in each case?

User Account

All Pages