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 64 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
YES! Correct, THANKS for helping me on my review

chereeb

  • Member
  • Posts: 326
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Ether was used widely for surgeries but became less popular because of its flammability and its tendency to cause vomiting. In England, it was quickly replaced by chloroform, but this agent caused many deaths and lost popularity.

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Did you know?

According to the CDC, approximately 31.7% of the U.S. population has high low-density lipoprotein (LDL) or "bad cholesterol" levels.

Did you know?

The immune system needs 9.5 hours of sleep in total darkness to recharge completely.

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

The Scale of Life 2 The Scale of Life 2
The breast, cutaway view showing both internal and external features. The breast, cutaway view showing both internal and external features.
Internal structures at the front of the eye. Internal structures at the front of the eye.
The recent mass upheavals in Tunisia, Egypt, Libya, Yemen, and Syria gave political scientists a cha The recent mass upheavals in Tunisia, Egypt, Libya, Yemen, and Syria gave political scientists a cha
Four-point scale for grading edema Four-point scale for grading edema
Internal Defenses Internal Defenses
Video: Global warming and its effect on climate change

For a complete list of videos, visit our video library