Authors libby rittenberg 457

8. How would each of the following affect average total cost,
average variable cost, and marginal cost?
1. An increase in the cost of the lease of the firm’s building
2. A reduction in the price of electricity
3. A reduction in wages
4. A change in the salary of the president of the company
9. Consider the following types of firms. For each one, the long-run
average cost curve eventually exhibits diseconomies of scale. For
which firms would you expect diseconomies of scale to set in at
relatively low levels of output? Why?
1. A copy shop
2. A hardware store
3. A dairy
4. A newspaper
5. An automobile manufacturer
6. A restaurant

10. As car manufacturers incorporate more sophisticated computer
technology in their vehicles, auto-repair shops require more
computerized testing equipment, which is quite expensive, in order to
repair newer cars. How is this likely to affect the shape of these firms’
long-run average total cost curves? How is it likely to affect the
number of auto-repair firms in any market?

NUMERICAL PROBLEMS
1. The table below shows how the number of university classrooms
cleaned in an evening varies with the number of janitors:
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org

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