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When a firm increases the quantity produced, it typically experiences a rise in total revenue, assuming demand remains stable. However, this can lead to diminishing marginal returns if production exceeds optimal capacity, causing costs to rise and potentially reducing profit margins. Additionally, increased production may attract more competition, impacting market prices. Ultimately, the firm's ability to sustain increased production depends on market conditions and operational efficiency.
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What is TP in economics?
The abbreviation for total product, which is the total quantity of output produced by a firm for a given quantity of inputs.
What happens when the cost of capital increases?
The market value of a firm's equity increases, the cost of capital decreases.
How does a firm calculate marginal cost?
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit.
What is the scale effect economics?
The scale effect indicates what happens to the demand for the firm's inputs as the firm expands production. As long as capital and labor are "normal inputs," the scale effect increases both the firm's employment and capital stock.
For the average total cost curve of a firm without economies of scale what happens to costs as output increases?
costs go down
What is TP in economics?
The abbreviation for total product, which is the total quantity of output produced by a firm for a given quantity of inputs.
What happens when the cost of capital increases?
The market value of a firm's equity increases, the cost of capital decreases.
How does firm calculate margin cost?
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit.
How does a firm calculate marginal cost?
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit.
What is the scale effect economics?
The scale effect indicates what happens to the demand for the firm's inputs as the firm expands production. As long as capital and labor are "normal inputs," the scale effect increases both the firm's employment and capital stock.
For the average total cost curve of a firm without economies of scale what happens to cost as output increases?
costs go down
For the average total cost curve of a firm without economies of scale what happens to costs as output increases?
costs go down
What happens when a firm raises its price in a market in which the price is in the inelastic range of the demand curve?
When a firm raises its price in a market where demand is inelastic, total revenue typically increases. This is because the percentage decrease in quantity demanded is smaller than the percentage increase in price, leading to higher overall sales revenue. Consumers are less sensitive to price changes for inelastic goods, often resulting in sustained or increased sales despite the higher price. Consequently, the firm benefits from increased revenue without significantly reducing the quantity sold.
How does a firm calculate its marginal cost?
A firm calculates its marginal cost by determining the change in total cost that results from producing one additional unit of output. This is done by dividing the change in total cost by the change in quantity produced.
What is AFC of a firm?
AFC, or Average Fixed Cost, is calculated by dividing a firm's total fixed costs by the quantity of output produced. Fixed costs are expenses that do not change with the level of production, such as rent and salaries. As output increases, AFC decreases because the fixed costs are spread over more units, illustrating the concept of economies of scale. This metric helps firms assess cost efficiency and pricing strategies.
What does a firm's supply curve for a good indicate?
A firm's supply curve for a good indicates the quantity of that good the firm is willing and able to produce and sell at different prices.
A new firm successfully enters a three-firm Cournot Oligopy without changing the demand and cost structures. The new price becomes?
When a new firm successfully enters a three-firm Cournot oligopoly, the number of firms in the market increases to four. This typically leads to an increase in total quantity produced, which results in a decrease in the market price, assuming demand remains constant. The new equilibrium price will be lower than the previous price set by the three firms, reflecting the increased competition and supply in the market. As a result, all firms may experience reduced profits, depending on their cost structures.
