Purchase Solution

Determining the minimum efficient scale

Not what you're looking for?

Ask Custom Question

Your cousin Vinnie owns a painting company with fixed costs of $200 and the following schedule for variable costs:

Quantity of Houses Painted per month 1 2 3 4 5 6 7
Variable costs $10 $20 $40 $80 $160 $320 $640

Calculate average fixed cost, average variable cost, and average total cost for each quantity? What is the efficient scale for the painting company?

Purchase this Solution
Solution Summary

Solution describes the steps to calculate average costs and determines the efficient scale for the company.

Solution Preview

Please refer attached file for better clarity of tables

Q TFC TVC AFC=TFC/Q AVC=TVC/Q ATC=AFC+AVC
1 200 10 200.00 10.00 210.00
2 200 20 100.00 10.00 ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • concepts of economies and diseconomies of scale

    The MES (minimum efficient scale) is the smallest level of output needed to attain all economies of scale and minimum long-run ATC.

  • diseconomics of scale

    are diseconomics of scale a. draw a representative long run average cost curve and indicate the minimum efficient scale b.

  • Economies of Scale

    131430 Economies of Scale When are economies of scale most important? a. When there are more than 100 employees in the firm b. When the minimum efficient scale to produce the product is large compared to the size of the market c.

  • Minimum efficient scale

    This post uses the concept of "Minimum efficient scale" of production.

  • Economies of Scale: Cost Curves and Output

    The additional output is proportionate to the addition of input. This is the minimum efficient scale. 3. Diseconomies of scale (Decreasing return to scale): This is the area of increasing LRAC.

  • Cost of Production

    Therefore, for economies of scale, the long run ATC curve for a firm would move downwards, whereas for diseconomies of scale, it would move upwards. The minimum efficient scale is the output level where the economies of scale are exhausted.

  • marginal, average variable, and average total cost curves

    Please find the attached solution. What is the effect of this technological change on the minimum efficient scale of production?

  • Diminishing the Marginal Productivity of Labor

    What is the effect of this technological change on the minimum efficient scale of production? See the ATC graph in the attached file.

  • Producer Behavior and Costs

    the minimum efficient scale = $10.

View More Related Solutions