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Dmitry_Shevchenko [17]
3 years ago
10

The United Kingdom started regulating the size of grocery stores in the early​ 1990s, and​ today, the average size of a typical

UK grocery store is roughly half the size of a typical U.S. store and​two-thirds the size of a typical French store​ (Haskel and​ Sadun, 2011).  
What implications would such a restriction on size have on a​store's average costs. Discuss in terms of economics of scale and scope.

A. Grocery store size does not affect the​ long-run average cost of production if there are economies of scale.

B. The​ long-run average cost of production for U.K. grocery stores is lower if there are no economies of scale.

C. The​ long-run average cost of production for U.K. grocery stores is lower if there are diseconomics of scale.

D. The​ long-run average cost of production for U.K. grocery stores is higher if there are diseconomics of scale.
Business
1 answer:
Svetradugi [14.3K]3 years ago
0 0

Answer:

C. The​ long-run average cost of production for U.K. grocery stores is lower if there are diseconomics of scale.

Explanation:

The diseconomy of scale is called the effect that occurs in the costs of a given production. These effects generate increasing costs for the company for each unit of product that is manufactured. Specifically and technically, a diseconomy of scale occurs when a percentage increase in production is less than the percentage increase in inputs.

Since the size of the grocery stores decreases, the average costs decreases. So, The​ long-run average cost of production is lower when there are diseconomics of scale.

Hope this helps.

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Answer:

E. It assumes that sales are determined solely by advertising and promotion.

Explanation:

The marginal-analysis model assesses the incremental benefits of an activity compared to the additional costs incurred by that same activity.  It is a decision-making tool to help maximize potential profits or benefits.

Sales are not determined solely by advertising and promotion.  There are many other factors, including price, demand and supply, the elasticity of the good, the nature of the good, among other factors.  The sales of goods considered to be necessities are not affected much by advertising and promotion, unlike luxury goods, for example.

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Explain precisely why ‘Opportunity Cost’ is always a RELATIVE concept and is never to be construed in ABSOLUTE terms. In additio
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Answer:

Opportunity costs are defined as the additional costs or benefits lost from choosing one activity or investment over another alternative. It is a relative concept because you cannot be 100% sure that the other investments or activities would have yielded a specific gain.

For example, when you calculate the economic cost of starting your own business, you consider your current salary as an opportunity cost. But what happens if you get fired (or the company closes), your opportunity cost would have been $0? Or how can you exactly measure your future salaries? Maybe in a couple of years you get promoted to manager, or maybe not?

The same applies to economies, since the opportunity cost of producing certain tradable goods is not always fixed, it might decrease or increase due to productivity or efficiency changes. But in order to calculate or determine we must include the most probable option.

In microeconomics, a strictly convex production possibilities frontier function must include a combination of both goods. In strict convexity, the second derivative f''(x) ˃ 0, so the PFF curve cannot be straight, it must have a slope.

When we calculate the opportunity costs of PPF, we usually try to determine which product has the lowest opportunity cost, but that is not an interior solution because both goods are not being produced (the curve is not strictly convex). On a strictly convex curve, as you approach the extremes the opportunity cost of producing one good is high, but on the center the opportunity cost is much lower.

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Three common methods employed in the clean-up of oil spills are
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3 years ago
Ivanhoe Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base rate of $1,380 per month. One of the bar
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Answer:

Fredonia Barber Shop

a. Variable costs per haircut = $4.40

   Total monthly fixed costs = $8,910

b. Break-even point in units = 1,350

Break-even point in sales dollars = $14,850

Net income with 1,670 haircuts = $2,120

Explanation:

a) Data and Calculations:

Fixed costs:

Wages of barbers per month =    $6,900 ($1,380 * 5)

Manager's allowance per month = $535

Advertising per month =                 $270

Rent per month =                           $1,010

Utilities per month =                        $160

Magazines per month =                   $35

Total fixed costs per month =     $8,910

Ivanhoe currently charges $11 per haircut.

Variable costs per haircut:

Commission per haircut =       $3.75

Barber supplies per haircut = $0.50

Utilities per haircut =                $0.15

Total variable costs per unit   $4.40

Contribution margin per haircut = $6.60 ($11 - $4.40)

Contribution margin ratio = 0.6

Break-even point in units = $8,910/$6.60 = 1,350

Break-even point in sales dollars = $8,910/0.6 = $14,850

Net income assuming 1,670 haircuts for a month:

Sales revenue = $18,370 ($11 * 1,670)

Variable costs =     7,340 ($4.40 * 1,670)

Contribution       $11,030

Fixed costs            8,910

Net income         $2,120

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Answer:

6) Forecasts:

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Hence, in this case, the correct answer is "Forecasts"

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