chapter 8 - Question 1 Short run- that period of time in...

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Question 1 Short run - that period of time in which the level usage of one or more input is fixed -Fixed inputs - cannot be adjusted as output changes in the short run Long run- that period of time in which all inputs are variable - Variable inputs- can be adjusted up or down as the quantity of output changes 1) Wal-Mart deciding to open 24 hours a day instead of 12 hours (short run) 2) Honda open another building to build more cars (Long run) 3) A bakery’s hire more baker to bake more cakes (short run) 4) A bakery’s opening another store to serve more cakes (long run) 5) Best Buy add more workers to its shipping department to speed it delivery ( short run) Question 2 Diminishing return of scale is a concept that explains the relationship between the rates of output with increasing inputs of product Economies of scale explains the relationship between the LRATC of producing a unit of good with increasing level of output Diminishing return of scale—short run Economies of scale—long run
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This note was uploaded on 04/02/2012 for the course MGE 302 taught by Professor Isse during the Spring '08 term at SUNY Buffalo.

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chapter 8 - Question 1 Short run- that period of time in...

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