Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 7, Problem 1MC
To determine
Economies of scope.
Expert Solution & Answer
Explanation of Solution
The cost of producing these two goods together is less than the total cost incurred for producing these two goods separately. Thus, option ‘c’ is correct.
Economics Concept Introduction
Economies of scope: Economies of scope refers to a situation where the total cost of production decreases if two or more number of goods are produced together rather than being produced separately.
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Students have asked these similar questions
The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner.
Ā
Ā Cheeseburger Production Costs
Quantity(burgers per hour)
Average Variable Cost (dollars)
Average Total Cost (dollars)
Marginal Cost (dollars)
0
ā
ā
ā
10
$1.00
$6.60
$1.00
20
0.70
3.50
0.40
30
0.70
2.57
0.70
40
0.78
2.18
1.00
50
0.88
2.00
1.30
60
1.07
2.00
2.00
70
1.34
2.14
3.00
80
1.74
2.44
4.50
90
2.23
2.86
6.20
100
2.81
3.37
8.00
Ā
a. At a quantity of 40 cheeseburgers per hour, the average total cost of production isĀ Ā (Click to select)Ā Ā fallingĀ Ā risingĀ Ā at a minimumĀ Ā and the marginal cost of cheeseburger production isĀ Ā (Click to select)Ā Ā fallingĀ Ā risingĀ Ā at a minimumĀ Ā .
Ā
b.Ā At a quantity of 60 cheeseburgers per hour, the average variable cost of production isĀ Ā (Click to select)Ā Ā fallingĀ Ā risingĀ Ā at a minimumĀ Ā and the average total cost of cheeseburger production isĀ Ā (Click to select)Ā Ā fallingĀ Ā risingĀ Ā at a minimumĀ Ā .
FindĀ TC, MC, AFC, AVC,Ā andĀ ATCĀ from the following table.Instructions:Ā Enter your responses rounded to two decimal places.Ā
Units (Q)
FC($)
VC($)
TC($)
MC($)
AFC($)
AVC($)
ATC($)
0
100
0
Ā
ā
ā
ā
ā
1
100
40
Ā
Ā
Ā
Ā
Ā
2
100
60
Ā
Ā
Ā
Ā
Ā
3
100
70
Ā
Ā
Ā
Ā
Ā
4
100
85
Ā
Ā
Ā
Ā
Ā
5
100
130
Ā
Ā
Ā
Ā
Ā
(Note:Ā Marginal costs should be interpreted as between levels of output.)
Price equals $20, quality equals 400 units, unit cost equals $15, implicit cost equals $4000. What does economic profit equal?
Chapter 7 Solutions
Managerial Economics: A Problem Solving Approach
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