Question 1 WHAT is this GRAPH showing? 14 12 S 10 M Average Cost of Production ($) 2 0 0 1,000 2,000 3,000 4,000 5,000 Quantity of Production Ol. Economies of Scale Ol. Marginal Costs ". Economics of Scales ON Average CostsQuestion 2 10 points Save Answer What is the goal of a new firm like Amazon or Netflix or Google years ago? 0" A firm will attempt to maximize its marginal costs, or marginal leading average costs, so will try to increase its marginal costs instead of average costs. 0\"-A firm will use diminishing returns to continuously lower its costs until it is the low cost producer. 0\""A firm will attempt to maximize its profits and have more market power by using perfect competition against its competitors. O'V-A firm will attempt to maximize its profits, or revenues minus costs, so will try to increase its revenue from customers or reduce its cost via efficiency and technology. Question 3 Why does the TC curve flatten or rise very slowly in the longer run time? OHM rum-1.5 0" Increasing efficiency as experience is gained over time, i.e. "Learning by Doing," or Automation. 0'\" Totals of positive numbers keep Adding and never subtract. OI\"'What goes up must come down, obviously! 0"'1ch costs lead AC costs. Question 4 10 points Save Ans What can happen with increasing returns to Scale? 0 " A firm with increasing returns to scale experiences increasing diminishing returns. 0 "'A firm with increasing returns to scale experiences a decreasing graph and will eventually go bankrupt when the graph reahes zero. 0 ""A firm with increasing returns to scale experiences higher and higher costs and will eventually lose out to perfect competition. O \"A firm with a big lead in technology can get an increasing lead and become a monopoly that is too big to challenge like Google. Question 5 Where does MC meet Average costs (AVC specifically) and why? 010203040505070NN100 W O " Top of the AVG curve, because when new MC turns lower, it drags AC behind it. 0\"' After the AVG curve, because when new AC turns higher, it drags MC behind it. 0 \""Simultaneously or next to the AVG curve, because when new MC turns higher, it drags AC behind it. 0 'V'Bottom of the AVG curve, because when new MC turns higher, it drags AC behind it. Question 6 Why do MC curves turn down in the longer run timeframe? # of Lumberjacks Figure 7.5 Ol. Totals of positive numbers keep Adding and never subtract. Increasing efficiency as experience is gained over time, i.e. "Learning by Doing," or Automation. " Diminishing returns. OW.What goes up must come down as in Newton.Question 7 Why do MC rise quickly at first (short run)? # of Lumberjacks Figure 7.5 When a new firm starts out, it is not very efficient yet and must gain experience so its costs are high. Totals of positive numbers keep Adding and never subtract. What goes down must go up first before it can go down. Diminishing returns occur in the short run.Question 5 10 point: 53mm What are some of the qualities of a monopoly vs monopolistic competition? CH'Monopoly has one seller with high market power so it can produce lower supply, so hire less workers and costs higher prices for consumers. Monopolistic competition has competitive sellers, but they can charge a higher price based on advertising their product is different. Oz'Monopoly has competitive sellers, but they can charge a higher price based on advertising their product is different. Monopolistic competition has one seller with high market power so it can produce lower supply, so hire less workers and costs higher prices for consumers. OE'Monopoly has a few sellers, but they can charge a higher price based on advertising their product is different. Monopolistic competition has many sellers all selling the same product at the same market price with perfectly elastic demand. O4\"Monopoly has a one seller, but they can charge a higher price based on advertising their product is different. Monopolistic competition has a few sellers so there is competition but very limited so prices are higher than normal. Question 9 What are the four types of Firm market structure? Ol. Perfect Competition, Monopoly, Oligopoly, Monopolistic " Perfectionistic, Monopolistic, Oligopolistic, Competistic "Perfect Competition, Mono-poly, Duo-poly, Multi-opoloy ON Marginal Cost, Variable Cost, Average Cost, Fixed CostQuestion 10 Why does the TC curve rise and never fall? # of Lumberjacks Figure 7.5 0. Diminishing returns. Ol. Ac costs lead MC costs. "Totals of positive numbers keep Adding and never subtract. ON.MC costs lead AC costs