Assume that the Cool Cappuccino Coffee House produces 100 coffee drinks a night.
ID: 1218154 • Letter: A
Question
Assume that the Cool Cappuccino Coffee House produces 100 coffee drinks a night. If the Coffee House doubles both labor and capital, the firm would have to produce how many coffee drinks a night in order to experience economies of scale?
A. 200
B. 250
C. 300
D. A&B
E. B&C
Assume that the LRAC is U-shaped, then which of the following is true?
A. Every short-run ATC (SRATC) is tagent to the LRAC at the minimum of the SRATC.
B. Every SRATC is tagent to the LRAC, but not necessarily at the minimum of the SRATC.
C. In the long run, a firm should not produce at the output level where SRATC = LRAC.
D. Only A and C.
E. Only B and C.
19.Assume that the Cool Cappuccino Coffee House produces 100 coffee drinks a night. If the Coffee House doubles both labor and capital, the firm would have to produce how many coffee drinks a night in order to experience economies of scale?
A. 200
B. 250
C. 300
D. A&B
E. B&C
20.Assume that the LRAC is U-shaped, then which of the following is true?
A. Every short-run ATC (SRATC) is tagent to the LRAC at the minimum of the SRATC.
B. Every SRATC is tagent to the LRAC, but not necessarily at the minimum of the SRATC.
C. In the long run, a firm should not produce at the output level where SRATC = LRAC.
D. Only A and C.
E. Only B and C.
Explanation / Answer
19.
E. B&C
Because when you increased the labor and capital to double, on the other hand more than 200 units will result in lower costs as marginal product will be higher than marginal cost.