Chapter 4.2

Monique has started a business framing photographs. She wants to understand the different costs associated with production. Given the following information about the rate of output and total costs, help Monique find the average total cost for producing the fourth frame.

$8

The minimum efficient sale is the output level at which a firm's average total costs are minimized. At what point on a graph does a firm achieve the minimum efficient scale?

At the point at which the firm moves from economies of scale to constant returns to scale

If the marginal cost is __ the average cost, then the average cost is __.

Greater than; rising

When a firm has sufficient time to adjust the size of its plant, how ill it decide which plant size to select?

It will select the. plant size with the lowest short-run averaged-total-cost curve at the desired output level

When the marginal product is falling, marginal costs are __ and the average fixed costs are __.

Rising; decreasing

Given the information in the table below, at what point do diminishing returns begin to be seen?

20 units of output

Fill the following table (using scratch paper) and then answer the question below. The marginal cost for producing 5 outputs is:

30

Long-run diseconomies of scale exist when the:

Long-run average cost curve rises

The point of diminishing returns occurs when:

The marginal-cost curve has reached its lowest point

A firm's long-run average-cost curve, also called its long -run planning curve, is constructed from:

The points of tangency of the short-run average total cost curve