This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What is the distinction between external and internal economies and diseconomies of scale in an ... (Read 37 times)

futuristic

  • Hero Member
  • *****
  • Posts: 638
on: Jun 29, 2018
What is the distinction between external and internal economies and diseconomies of scale in an industry?
 
  What will be an ideal response?

Question 2

Toothpicks are sold in a perfectly competitive market. The market price is currently 3 per box of one hundred toothpicks.
 
  At its current level of production, a representative firm in the toothpick industry is producing at a level of output such that long-run average cost is 3.25 per box of one hundred toothpicks. Given this information, is the toothpick industry in equilibrium? Explain.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

mjbamaung

  • Sr. Member
  • ****
  • Posts: 343
Reply #1 on: Jun 29, 2018
Answer to Question 1

Internal economies and diseconomies of scale are found within firms. External economies and diseconomies of scale occur on an industry-wide basis.

Answer to Question 2

No, the industry is not in equilibrium. In long-run equilibrium, price is equal to short-run marginal cost, short-run average cost, and long-run average cost. Firms in this industry are incurring losses and some will leave the industry. This will increase the price of toothpicks until firms are no longer incurring losses. In the long-run profits are driven to zero.


futuristic

  • Member
  • Posts: 638
Reply 2 on: Jun 29, 2018
Gracias!

dreamfighter72

  • Member
  • Posts: 355
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Though newer “smart” infusion pumps are increasingly becoming more sophisticated, they cannot prevent all programming and administration errors. Health care professionals that use smart infusion pumps must still practice the rights of medication administration and have other professionals double-check all high-risk infusions.

Did you know?

The term pharmacology is derived from the Greek words pharmakon("claim, medicine, poison, or remedy") and logos ("study").

Did you know?

Interferon was scarce and expensive until 1980, when the interferon gene was inserted into bacteria using recombinant DNA technology, allowing for mass cultivation and purification from bacterial cultures.

Did you know?

Normal urine is sterile. It contains fluids, salts, and waste products. It is free of bacteria, viruses, and fungi.

Did you know?

Adolescents often feel clumsy during puberty because during this time of development, their hands and feet grow faster than their arms and legs do. The body is therefore out of proportion. One out of five adolescents actually experiences growing pains during this period.

External View of the Right Eye External View of the Right Eye
Scale used to measure pupil size in millimeters. Scale used to measure pupil size in millimeters.
Examples of internal controls. Examples of internal controls.
(A) Internal anatomy of the spinal cord. (B) Ascending spinal tracts. (A) Internal anatomy of the spinal cord. (B) Ascending spinal tracts.
Hardness: Mohs Scale (1 of 2) Hardness: Mohs Scale (1 of 2)
External Anatomy of the Spinal Cord External Anatomy of the Spinal Cord
Video: Neural Reflex Arc Animation

For a complete list of videos, visit our video library