Assume that a firm uses just two factors of production. The table given below shows what happens to output as the firm increases one or both of these inputs.The effects of increasing the amounts ofboth inputsSituation (i)Situation (ii)InputInput 2 Output Input 1 Input 2 Output1112114222422243336323244484238560242Which situation represents the long run?

In situation (i) both the input are variable and in situation (ii) input 1 is variable and input 2…

Answered: Which situation represents the long…

Business

Economics

Which situation represents the long run?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3PA

See similar textbooks

Related questions

Q: In the long run

A: In the long run firms get more power to change inputs.

Q: What are Sunk Costs?

A: A sunk cost refers to money that has been spent already and which is unable to recovered. In other…

Q: Explain how short-run economic profits become long-run economic costs. When profits fall to zero,…

A: A stopwatch or a calendar cannot correctly identify the boundary between the short and long runs. It…

Q: Should the Marginal revenue exceed the marginal cost? Why?

A: The firm is said to be in equilibrium when it has no tendency to increase or decrease its output. If…

Q: Which are the most likely to be produced in a perfectly competitive industry?

A: A completely competitive market is one in which all businesses sell the same product and where…

Q: The number of firms in an industry is not always a good indicator of the extent to which that…

A: The number of sellers in an industry determines the market share of the firm. A large number of…

Q: What happens to the value of resources when losses are present? If a firm making losses goes out of…

A: The value of resources decreases when the firms make losses as it would mean that the revenue earned…

Q: Should Tim want to maximize his profit in the short-run, how many t-shirts will he produce?

A: Given that the market structure is monopolistic competition, the profit maximizing condition is MC=…

Q: Austin owns the Fruit Bowl Inc company. Which of the following would be short run decisions for…

A: There are many types of inputs used in the production of goods and services. Two of them are capital…

Q: customers there while you golf. Why do you think a miniature golf course would stay open during the…

A: *answer:

Q: Why can't firms enter the market in the short-run?

A: There are various types of market structures which have different characteristics of the number of…

Q: William Shepherd’s research of U.S. industries showed a clear trend in the competitiveness of the…

A: The competition is the increased presence of the competing firms in the market where the buyers can…

Q: Why is it important for managers to understand the mechanics of supply and demand both in the short…

A: The terms "long run" and "short run" do not relate to a specific time period like three months or…

Q: In Production Theory, what is meant by a “short-run” production period? What is meant by a…

A: In short run production theory there are fixed cost,whereas in long run there are no fixed cost.

Q: What are three short-run outcomes in the perfect competition?

A: In the short-run, the perfect competitive firms, can have three outcomes.

Q: Why would a firm that is making loss in the short-run choose to operate rather than shut down?

A: A short run is a time period in which a firm incurs both fixed cost and variable cost. A long run is…

Q: Some producers do not stop their production when they face loss in their production. Why?

A: Shut-down decision signifies a short-run decision taken where a firm decides whether to operate or…

Q: What is the short run

A: In Economics there are shortrun, long run and very long run concepts short run in economics…

Q: Why do a firm's profit disappear in the long run?

A: The firms operating in the long run, have to adjust and abide by the time frame which would allow…

Q: What type of organization is appropriate in the competitive business environment?Please explain with…

A: Competitive business environment:- A competitive environment can be explained as a framework…

Q: If new technology in a perfectly competitive market brings about a substantial reduction in costs of…

A: The term "perfect competition" refers to a fictional market structure in which all suppliers are…

Q: Why would a firm that incurs losses choose to produce rather than shut down? Why could this choice…

A: In short run firm exhibits return to factor where only one factor is variable and another factor is…

Q: What is long and short run

A: Answer: Short-run: Short-run refers to the time period where some factors of production are variable…

Q: Family Mart like inner city grocery stores, sometimes exist even though they do not earn economic…

A: Hi Student, thanks for posting the question. As per the guideline we are providing answers for the…

Q: If so, can you provide an example of what you mean by the operational environment?

A: The term operational enviornment is used to explain different situations in different fields as it…

Q: Small “Mom and Pop firms,” like inner city grocery stores, sometimes exist even though they do not…

A: “Mom and Pop firms” is a small independent business entity where the ownership and operations are…

Q: If you're a manager in a highly competitive business such where should you put your most effort to…

A: As a manager ,the primary responsibility is to look in the profits of the business. Business can be…

Q: When will a business shut-down in the short-run?

A: Short-run: - it is a short time period in which some factors of production are variable and some are…

Q: What is the LAW OF DIMINISHING RETURNS, and why is this law considered a short-run phenomenon?

A: The Law of Diminishing Return: It occurs when the employment of input with the other fixed input of…

Q: In perfect competition market, Firms have perfect knowledge of market. What does that mean?

A: A perfect competitive market structure has many buyers and sellers. All the firms are the price…

Q: Sketch a typical LRATC and show all the important areas and points on it and show where the firm…

A: Long-Run Total Cost (LRATC): What Is It? When all inputs are regarded to be variable, and the scale…

Q: What does it mean to be operating a firm in the "long run?"

A: "Since you have asked multiple questions, we will only first question for you. If you have any other…

Q: What specific data must a firm examine to decide the quantity of product it should produce to make…

A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…

Q: What does that mean in terms of long-run profit?

A: Perfectly Competitive Market is the market in which buyers and sellers are large in numbers and they…

Q: Which 'Economies of Scale' creates imperfect competition and Why?

A: Economies of scale refers to a situation where there is fall in per unit output of average cost with…

Q: Many firms in the United States file for bankruptcy every year, yet they still continue operating.…

A: Filling for bankruptcy does not mean that the firms have to shut down. In the US the bankruptcy laws…

Q: What is the difference between short-run and long-run

A: Short Run and Long Run Costs Long run costs have no fixed elements of creation, while short run…

Q: How is long run equilibrium achieved

A: The firms produce goods and services using different inputs and result in the maximisation of the…

Q: Which stage of short run production is efficient? Why?

A: In microeconomics, we have two time periods namely short run and long run. Short run is the time…

Q: Explain why a company would shut down in the short run.

A: The shut down point is the point at which a firm decides to seize its operations in the short run…

Q: A firms total profit equals?

A: The amount of money a company makes by selling its goods or services at a specific price is revenue.…

Q: Why do firms, in the long run, continue to stay in the industry if they are earning 0 profits?

A: Answer - In the long run where the every input can vary and as in the long run where firms can make…

Q: Using the tools of economic analysis that you learned, analyze the behavior of the enterprise…

A: Introduction Perfect competition is a market where large no. of firms producing homogeneous products…

Q: Businesses operate in the short run, but do they ever operate in the long run? Explain

A: In the field of economics, it is assumed that firms work towards achieving their objective of…

Q: What are some examples to illustrate Henry Hazlitt's lesson that what is true in the short run may…

A: According to Henry Hazlitt's lesson: Actions that are advantageous in the short run can cause…

Q: Is it even better for perfectly competitive firms to produce output even though it is losing money?…

A: In economic theory, perfect competition occurs when all companies sell the same products, market…

Q: Smiling Cow Dairy can sell all the milk it wants for$4 a gallon, and it can rent all the robots it…

A: Since you have posted a question with multiple subparts, we will solve the first three subparts for…

Question

Assume that a firm uses just two factors of production. The table given below shows what happens to output as the firm increases one or both of these inputs.
The effects of increasing the amounts of
both inputs
Situation (i)
Situation (ii)
Input
Input 2 Output Input 1 Input 2 Output
1
1
12
1
14
2
2
24
2
2
24
3
3
36
3
2
32
4
4
48
4
2
38
5
60
2
42
Which situation represents the long run?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A firms marginal cost curve above the average variable cost curve is equal to the films individual supply curve. This means that every time a firm receives a price from the market it will be willing to supply the amount of output where the price equals marginal cost. What happens to the films individual supply curve if marginal costs increase?
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
Would you consider an interest payment on a loan to a film an explicit or implicit cost?
What is the difference between a fixed input and a variable input?
In choosing a production technology, how will firms react if one input becomes relatively more expensive?
10 a 16 5 12 — P=$/Q 100 95 90 85 80 75 70 65 60 SSSSSSSOS 45 40 35 M3221150 43 D before stay at home order Q of toilet paper 15 Dafter stay at home order The graph shows the market for toilet paper in Michigan. Based on the graph, we know that the production of toilet paper experiences diminishing returns to the variable input. Explain how we know and what this means.
7 Output for a simple production process is given by Q- KL, where K denotes capital and i denotes labor. The price of inbor is $10 per unit and the price of capital is $2 per unit. If at the current level of production the marginal product of labor is 8 while the marginai product of capital is 2, then in order to minimize your costs of production you should use Multipie Choice more capital and less labor the same ahount of both inputs more labor and less capital more of both inputs.
Suppose the production function for high quality brandy is given by : Q = √KL Where q is the output of brandy per week and L is labor hours per week ., in the short run K is fixed at 100, so the short run production function is Q = 10√L a. Ifthecapitalrentsfor10$andthewageare5$perhour.,writetheshortruntotalcost function. b. How much will the firm produce at a price of 20$ per bottles of brandy ? c. Howmanylaborhourswillbehiredperweek?
Dr. D. is a critic of standard microeconomic analysis.In one of his frequent tirades, he was heard tosay, ‘‘Take the argument for upward-sloping,long-run supply curves. This is a circular argumentif I ever heard one. Long-run supply curves aresaid to be upward sloping because input pricesrise when firms hire more of them. And that occursbecause the long-run supply curves for theseinputs are upward sloping. Hence, the argumentboils down to ‘long-run supply curves are upwardsloping because other supply curves are upwardsloping.’ What nonsense!’’ Does Dr. D. have apoint? Explain clearly.
Cost LRAC 40 30 20 10 100 200 400 800 Output b. What happened to the cost of one good as the firm increased its output from 100 units to 200 units and from 200 units to 400 units?
IAN GE Student Resources - Faculty Resources - Academic Resources - Ime grupiI Delow IIUIUUES two piunt Sizes us musuuteu uy ACr UnU ACZ. AC1 AC2 AC1 AC2 LRAC Q1 02 Output per time period Refer to the graph above to answer this question. Which of the following statements is correct if a firm is operating at point a on AC1? Select one: O a. The firm is achieving MES. O b. Building a larger plant would result in lower long-run average cost. O c. Building a larger plant would not result in lower long-run average cost. od. The firm has achieved capacity output. O e. An increase in the output would not lower costs. Clear my choice Staut o gao