Upward or downward shift in the long run average cost curve
Course:- Business Economics
Reference No.:- EM131004927

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1. Indicate whether each of the following involves an upward or downward shift in the long run average cost curve or instead, involves a leftward or rightward movement along a given curve. Also indicate whether each will have an increasing, decreasing, or uncertain effect on the level of average cost: A) a rise in wage rates; B) a decline in output; C) an energy -saving technical change; D) a fall in the interest rates; E) an increase in learning experience

2. St. Thomas Winery plans to reopen a new production facility in the Napa valley of California.

Based on information provided by the accounting department, the company estimates fixed costs of $250,000 per year and average variable costs of

AVC = $10+ $0.01Q

Where AVC is average variable cost (in dollars) and Q is output measured in cases of output per year.

Estimate total cost and average total cost for the coming year at a projected volume of 4000 cases.

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