econ long run

economies of scale explain the downward sloping part of the

long run average total

economies of scale explain the downward sloping part of the

longrun average total cost curve

which of the following industries highlight the pattern of declining long run average total costs

steel auto aluminum

minimum efficient scale

the lowest level of output at which a firm can minimize long-run average costs

high volume production and being a large scale producer are economic justifications for

the purchase of efficient capital managerial specialization labor specialization

which of the following defines constant returns to scale

the unchanging average total cost of producing a product as the firm expands the size of its plant (its output) in the long run

labor specialization is one of the reasons for

economies os scale

Greater labor specialization has which of the following effects?

eliminates the loss of time that occurs when a worker shifts from one task to another

greater labor specialization

eliminates the loss of time that occurs whenever a worker from one task to another

principle of diminishing marginal utility

explains why bobs second soda is less enjoyable than first one

overhead costs or

fixed costs

what are the features of managerial specialization

greater efficiency lower unit costs

in time, the growth of a firms plant size and the output may lead to

higher average total costs and diseconomies of scale

consumer surplus

highest price a consumer is willing to pay for a good - actual price the consumer pays

the flat section

of long run atc curve is constant returns to scale

price elasticity of demand

percentage change in quantity demanded relative to a percentage change in price

cross-price elasticity of demand

% change in quantity of A demanded / % change in price of B

producer surplus

(market price + mc of production) -summed over q sold

cross elasticity of demand between coca cola and pepsi is

POSITIVE so that coke and pepsi are SUBSTITUTES

maximum willingness to pay

Price at which the consumer is indifferent between buying the product and not buying

consumer surplus on a graph

The area under the demand curve and above the market price is equal to total consumer surplus

if a person can produce more items than anyone else

absolute advantage

the long run average total cost curve is made up of

all points of tangency of the shortrun atc curves

marginal utility

an additional amount of satisfaction a person receives from an extra unit of good

the occurrence of economies and diseconomies of scale

are important determinants of an industries structure

As a firm grows larger

decision making may be slow impairing efficiency and RAISING atc

as a firm grows

decision making may slow impairing efficiency and raising atc

When minimum efficient scale occurs at a low level of output, consumer

demand may support a large number of relatively small producers

slope of long run atc curves can change because of

different economies of scale over a broad range of output

diminishing marginal returns

does NOT contribute to the shape of long run atc curve

which of the following is an example of labor specialization

hiring more workers means jobs can we divided and subdivided each worker may now have 1 task instead of 5 workers can work full time on the tasks for which they have unique skills

long run atc curve depicts economies of scale

in the portion where atc cost decreases while output continues to increase

compliments

increase in price salsa decrease in demand for tortilla chips increase demand for potato chips

which of the following worker productivity factors often leads to diseconomies of scale

increased opportunities to shrink and avoid work slower coordinated decision making to workers worker ilienation from the employer

how can industries and firms adjust to their use of output in the long run

industries and firms can increase or decrease their overall capacity and plant capacity respectively

Price of good A down TR good A down

inelastic

the use of efficient capital

is one of several reasons large scale producers can achieve greater economies of scale

in general what production characteristic and plant size are required for efficient capital usage to be effective

large scale producers high production volume

the minimum efficient scale is the

lowest level of output at which a firm can minimize long run average cost

even short run ATC curve point that touches the long run ATC curve also known as a planning curve shows the

lowest unit cost attainable for different output levels when the firm has had time to make the desired changes to its plant size

natural monopoly is a relatively rare market situation where average total cost is

minimized when only one firm produces the particular good

which of the following occurs at a low level of output for small businesses such as those retail trades and light manufacturing industries

minimum efficient scale

labor specialization

refers to the division of work into discrete tasks and assigning each task to workers

in the production constant

returns to scale occur between economies and diseconomies of scale run average costs do not change as output continues to increase

in production constant

returns to scale occur between economies and diseconomies of scale, run average costs dont change as output continues to increase

learning by doing means that a firms production and marketing expertise usually

rises as it produces sells more output

does NOT contribute to U shape of long run atc curve

rising resource prices law of diminishing returns

which of the following worker productivity factors often leads to diseconomies of

slower coordinated decision making to workers worker alienation from the employer increased opportunities to shrink and avoid work

which of the following contribute to diseconomies of scale

slower decision making leading to increased average total costs opportunities to shrink work leading to increased average total costs

a measure of all the benefit you get from all the coffee you consume

total utility from coffee

consumer surplus

value of good - (price paid+ q bought)

under the definition of long run all resources and inputs are

variable

economies of scale can and may exist when a production operation is small in size and efficient

while diseconomies of scale set in when production operations grow in size and less efficient

in general small firms cannot use management specialists to their best advantage

while large firms are better able to utilize management specialization