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