CourseCourseConceptConceptDocsDocuments

AP Microeconomics Prd 1 A a Define Using Graphs Where Appropriate Key Terms and Concepts Relating to Production and Cost B Explain Using Topic 3 3 Questions

Analyze long-run production choices by calculating LRATC and identifying economies of scale, diseconomies, constant returns, and efficient scale.

Syllabus
Effective Fall 2022
Course
AP Microeconomics

Exam points

  • distinguish the long run by recognising that every production input and cost is variable
  • classify increasing, constant or decreasing returns from proportional input and output changes
  • calculate LRATC from total cost and output and track how it changes across production levels
  • identify economies, constant costs or diseconomies from the slope of an LRATC curve
  • locate minimum efficient scale using LRATC and the relevant short-run cost curves

AP Microeconomics Prd 1 A a Define Using Graphs Where Appropriate Key Terms and Concepts Relating to Production and Cost B Explain Using Topic 3 3 Questions question 1

[Maximum number: 2]

Deskward is a typical profit-maximizing firm that produces and sells wooden desks in a constant-cost, perfectly competitive market that is in long-run equilibrium.

Question (a)

(a)

Deskward also produces chairs. Deskward increases its production from 500 chairs to 600 chairs, and its long-run total cost increases from $80,000 to $108,000.

[ 2 ]

Question (i)

(i)

Calculate Deskward's long-run average total cost of producing 500 chairs. Show your work.

[ 1 ]

Question (ii)

(ii)

As Deskward increases production from 500 chairs to 600 chairs, is Deskward experiencing economies of scale, diseconomies of scale, or the efficient scale? Explain using numbers.

[ 1 ]
All question bank results loaded