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Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - . If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 - . Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3-is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises - relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).

Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - . If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 - . Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3-is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises - relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 38CTQ: Do you think that the taxicab industry in large cities would be subject to significant economies of...
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Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3–is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises , relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).
Transcribed Image Text:Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3–is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises , relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).
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