Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / The table illustrates the long-run average cost values for the refrigerator industry

The table illustrates the long-run average cost values for the refrigerator industry

Accounting

The table illustrates the long-run average cost values for the refrigerator industry. Use the table to answer the three corresponding questions.

 

  Quantity Produced Long-Run Average Cost
A 10,000 $1,200
B 20,000 $900
C 30,000 $700
D 40000 $700
E 50,000 $800
F 60,000 $1,000

Which section of the firm's long run average cost curve demonstrate:

a. Economies of scale.

b. Constant return of scale.

c. Diseconomies of scale.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

In the case of economies of scale, the long-run average cost decreases with the increase in the output.

In the case of constant returns of scale, the long-run average cost remains the same with the increase in the output.

In the case of diseconomies of scale, the average cost is more than the increase in output.

In the above table, the economies of scale exist from A to C where the increase in cost is less than the increase in the output.

In the above table, the constant returns to scale exist from C to D where the increase in cost is equal to the increase in the output.

In the above table, the diseconomies of scale exist from D to F where the increase in cost is more than the increase in output.