0
If extra demand leads to higher output, unit costs may initially decrease due to economies of scale, where fixed costs are spread over a larger number of units produced. However, if production capacity is strained or resources become more limited, variable costs may rise, leading to higher unit costs. Ultimately, the net effect on unit costs will depend on the extent of increased demand and the efficiency of production processes.
What else can I help you with?
What will happen to profits and output levels when variable costs rise in a perfectly competitive industry?
When variable costs rise in a perfectly competitive industry, profits will decrease and output levels may decrease as well. This is because higher variable costs reduce the profit margins for firms, leading to lower overall profits. In response, firms may reduce their output levels to maintain profitability.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
Do the fixed costs increase as output increases?
No these are costs such as rent stay basically same irrespective of output
What is the cause of price fluctuation?
Like everything else, it is supply and demand. There are artificial stimulations to the market that require time to sort out. For example, the current high price of fuel oil, not only creates high production costs, but also a higher demand for feed corn supplies by the ethanal production industry.
What are a business firm's fixed and variable costs of production?
Fixed costs are costs that do not vary with the level of output, such as rent and insurance premiums. Variable costs are costs that change with the level of output, such as wages and raw materials.
What will happen to profits and output levels when variable costs rise in a perfectly competitive industry?
When variable costs rise in a perfectly competitive industry, profits will decrease and output levels may decrease as well. This is because higher variable costs reduce the profit margins for firms, leading to lower overall profits. In response, firms may reduce their output levels to maintain profitability.
What happen as the volume of output decreases?
Fixed costs per unit will increase.
For the average total cost curve of a firm without economies of scale what happen to costs as output increases?
costs go down
What is Ramsay pricing?
it assigns costs based on the price elasticity of demand. het higher the elasticity (elastic), the lower the charge of fixed costs when allocated amongst products.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
Do the fixed costs increase as output increases?
No these are costs such as rent stay basically same irrespective of output
What is the cause of price fluctuation?
Like everything else, it is supply and demand. There are artificial stimulations to the market that require time to sort out. For example, the current high price of fuel oil, not only creates high production costs, but also a higher demand for feed corn supplies by the ethanal production industry.
What are a business firm's fixed and variable costs of production?
Fixed costs are costs that do not vary with the level of output, such as rent and insurance premiums. Variable costs are costs that change with the level of output, such as wages and raw materials.
Firm A one firm in a competitive industry faces higher costs of production As a result conusmers end up paying higher prices Discuss?
If a firm is having higher costs than another in the same industry, they will pass the costs to the consumer. That has to happen if the firm is supposed to make any profits.
What can happen if costs and budget are not monitored?
These are costs that change according to output .The costs change directly according to how many products are made .An example of this is a business producing footballs will have varying requirements for amounts of rubber, lead and valves depending on how many footballs it makes .
How can a regulation affect a producers output decisions?
Regulation is much like a tax. Because it increases costs, it will lead to higher prices and lower output.
What happens when there is too much demand for available goods and services?
When there is too much demand for available goods/services, there is a shortage. To meet this excess demand, firms increase production (at higher costs) until demand = supply. Thus, a shortage generally implies price is too low.
