Chloe's Cafe sells gourmet cinnamon rolls. In the long run, the cafe incurs a total cost of $500...
Question:
Chloe's Cafe sells gourmet cinnamon rolls. In the long run, the cafe incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Cafe exhibits economies of scale between 1,000 and 2,000 cinnamon rolls, the long-run average total cost for 1,500 cinnamon rolls is:
a. equal to $0.50.
b. lower than $0.50.
c. higher than $0.50.
d. higher than $500.
Economies of Scale
In economics, the economies of scale is defined as a reduction of the total costs due to increase in production as the company ramp up its capacity to produce goods to meet customer demands.
Answer and Explanation:
Become a Study.com member to unlock this answer! Create your account
View this answerSee full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Economies of Scale: Definition, Benefits & Examples
from
Chapter 3 / Lesson 41
22K
Explore the principle of economies of scale and delve into several real-world examples. Learn the formula for determining economies of scale as well as their types, benefits, inputs and the factors that influence them. Discern the limits of economies of scale and find out the difference between economies of scale and diseconomies of scale.
Related to this Question
- If Bryan's cafe has an average total cost (which includes opportunity cost) of $4.10 per coffee and an average variable cost of $3.90 per coffee, should he keep selling coffees in the short run if the price is $4 per coffee? a. Yes b. No c. Need more info
- You own a cafe in a large urban area that carries a total of $500,000 per year in fixed costs. Your cafe sells only coffee for $2,50 per cup. The average variable cost per cup is $1. a. How many cups would you need to sell to break even? b. How many cup
- Suppose the price of bagels in Allentown is currently $1.05 per bagel. There are 10 low-cost bakeries and 10 high-cost bakeries that can produce bagels, each of which has the supply function low-cost bakery: Qs(low-cost) = 200P - 125 high-cost bakery: Q
- Suppose that with a budget of $210, Deborah spends $126 on sushi and $84 on bagels when sushi costs $2 per piece and bagels cost $2 per bagel. But then, after the price of bagels falls to $1 per bagel
- Suppose the price of coffee is $3 each, the price of bagels is $2 each, and a person's budget is $40. The relative price of coffee is A. 1.5 bagels. B. 2/3 of a bagel. C. 13.33 bagels. D. 20 bagels.
- Jed's Bakery is famous for its large cinnamon buns. The bakery has fixed costs of $100. Jed must pay each worker a wage of $10.00 per hour, and each works an 8-hour shift. He earns $2 for each cinnamon bun that is sold. The following table shows how many
- Commercial bakeries typically sell a variety of products (bread, rolls, muffins, cakes, etc.) to local grocery stores. There are substantial economies of scale in the production of each one of the bakery products, which makes it cost-effective to speciali
- The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should: a. lower the price of the cinnamon rolls b. leave the price of the cinn
- If Julia knows the average total cost of baking 12 dozen muffins is $6 and the average total cost of producing 13 dozen muffins is $7, then the marginal cost of producing the 13th dozen muffins is a.
- Suppose the price of bagels in Allentown is currently $0.75 per bagel. There are 10 low-cost bakeries that can produce bagels, each of which has the supply function Qs = 200P - 100. There are 10 high-cost bakeries that can produce bagels, each of which ha
- Chelsea's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Chelsea pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Wha
- Lucy consumes only coffee (c) and doughnuts (d). Coffee costs $1.50 per cup, and doughnuts coat $2 end. (a) Suppose Lucy has $40 to spend on coffee and doughnuts. Write an equation for her budget con
- Suppose Sarah owns a small company that makes wedding cakes. The table below shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. The baker business is competitive.A. Compute average fixed costs, average variabl
- Bianca bakes delicious cookies. Her total fixed cost is $40 a day, and her average variable cost is $1 a bag. Few people know about Bianca's Cookies, and she is maximizing her profit by selling 10 bag
- Nicholas Coffee roasts coffee the old-fashioned way (in gas-fired, rotating barrel roasters). It is selling its gourmet coffee beans at $20 per pound. Variable costs per pound are $8, and it has fixed cost of $840,000 per year. 1. Find its breakeven quant
- Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loa
- A speciality coffee house sells Colombian coffee at a steady rate of 6000 pounds annually. The beans are purchased from a local supplier for $3.00 per pound. The coffee house estimates that it costs them $75 in paperwork and labor to place an order for th
- Johanna likes to drink her coffee with milk (and never black). She requires 3 tbsp of milk to be able to enjoy one cup of coffee. Suppose that Johanna has $22 to spend on coffee and milk per week. Coffee costs $1.25 per cup and milk costs $0.25 per tbsp.
- Bob Edwards owns a pastry shop. Bob hires an economist who assesses the shape of the pastry shop's average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist exp
- Suppose Gilberto has a weekly budget of $32 to spend on coffee and cereal. Coffee is priced at $4 per cup, and cereal is priced at $2 per box. \\(a.) If Gilberto spends his entire $32 on coffee, he ca
- The average total cost of producing six bagels is: \\ A. $0.10 B. $0.15 C. $0.20 D. $0.80
- You manage Mt. Claire Cafe which sells meals at a price of $8.50 each. The meals include a hot dish and a beverage of your choice. The average number of meals sold per month is 21,000. The owner of Mt. Claire Cafe would like to increase its sales. They kn
- A bakery currently sells chocolate chip cookies at a price of $16 per dozen. The marginal cost per dozen is $8. The cookies are becoming more popular with customers, and so the bakery owner is conside
- The scent of cinnamon rolls wafting from a local bakery out to the sidewalk is: a. a negative externality. b. a positive externality. c. either a positive or negative externality, depending on whether you enjoy or detest the scent. d. not an externality i
- Juliette owns a small bakery, where she works full-time baking the bread and pastries she sells. Her total revenue last year was $100,000. Her rent for the bakery was $3,000 a month. She has one clerk, who she pays $2,000 a month. Her ingredients and othe
- If Marco's cafe was previously selling 300 coffees per day at a price of $5 per coffee, but is now only selling 230 coffees per day at a price of $4 per coffee. By how much has Marco's economic profit per day declined if his average total costs (which inc
- If Jennie spends her income on ice cream and biscuits and the price of ice cream is three times the price of biscuits, then: a. She maximizes her utility by buying equal quantities of ice cream and biscuits, b. She maximizes her utility by buying three ti
- Lauren is the owner of a bakery that earns a zero (0) economic profit. Last year, the total economic profit was $145,000, her rent was $12,000, her labour costs were $65,000 and her overhead expenses we
- Folgers and Maxwell House coffees tend to be much more price-elastic than Starbucks brand coffee. As a result we can conclude that: A. when Starbucks raises prices, it causes sales of Folgers and Maxwell House to fall by a lot. B. when the price of Folger
- Belinda owns a cake store in a small town and is the only business selling cakes. Her marginal cost is constant at $7 per cake. She currently charges $38 for each cake and aims to profit maximise. Below is a table for potential prices Belinda could charg
- Becca has $120 to spend on burritos and CDs. The price for CDs is $12 each and burritos cost her $5 each. If Becca buys 5 CDs, how many burritos can she get? a. 12 burritos b. 10 burritos c. 6 burritos
- Nora is a baker. She bakes muffins using five inputs: flour, sugar, blueberries, electricity (for the oven), and labor. Her costs per muffin are as follows: $0.01 for flour, $0.02 for sugar, $0.03 for blueberries, $0.02 for electricity, and $0.10 for the
- A donut shop sells fresh-baked donuts from 5 a.m. until 3 p.m. every day. The shop does not sell day-old donuts, so all unsold donuts are thrown away at 3 p.m. each day. The cost of making and selling a dozen donuts is $1.50; there are no costs associated
- Suppose Carlos has a weekly budget of $32 to spend on coffee and cereal. Coffee is priced at $4 per cup, and cereal is priced at $2 per box. If Carlos spends his entire $32 on coffee, he can buy _____ cups of coffee. If he spends his entire $32 on cereal,
- Abby consumes only apples. In year 1, red apples cost $2 each, green apples cost $1 each, and Abby buys 15 green apples. In year 2, red apples cost $1, green apples cost $2 and Abby buys 10 red apples. a. Compute a consumer price index for apples for each
- Suppose Sarah owns a small company that makes wedding cakes. The table below shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. \\ \begin{matrix} \text{Number of Cakes Per Day} & \text{ Total Cost Per Day}\\ 0
- Bob Edwards owns Bob's Bagels. He hires an economist who assesses the shape of the bagel shop's average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist explai
- The total cost of producing two bagels is: \\ A. $0.10 B. $0.20 C. $0.40 D. $0.50 \\
- Julie sells homemade designer cookies. The marginal cost of producing a cookie depends on how many cookies Julie produces and is given by the formula, MC = 1.2Q. Thus, the first cookie Julie produces
- You spend your entire budget on coffee and doughnuts. Each doughnut costs $2 and a cup of coffee costs $1. a. What is the slope of your budget constraint? Interpret it. Suppose, one of the following two things happen to you tomorrow. Situation 1: Someone
- Maja only spends her money on two goods: cinema and pizza. A ticket to the cinema costs $80 and pizza costs $70. Maja has a total utility function from these two goods. U=3Q_{cinema}+2Q_{pizza}+Q_{cin
- Sammy's Bakery and Presley's Sweetshop both sell cupcakes. The market price of one chocolate cupcake is $2.50. Sammy's is willing to sell a cupcake for as little as $1.65; Presley's is willing to sell a cupcake for as little as $1.75. What is the total pr
- Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: [TABLE] 1. Determine if the following sta
- Suppose Jen is the only supplier of both coffee and donuts in Smalltown. The cost of producing the goods is zero. Jen sells coffee for $3 and donuts for $3. In a typical hour, 5 costumers buy just one coffee, 4 buy just one donut, and 3 costumers buy one
- Kaile Cakes produces 10 cakes per day. The marginal cost of the tenth cake is $24, and the average total cost of 10 cakes is $6. The average total cost of 9 cakes is: a. $8 b. $5 c. $6 d. $4
- Kate spends her weekly income of $30 on chocolate (x) and tacos (z). Initially, when the prices are P_x = P_1 = $2. She buys x = 10 and z = 5. After the prices change to P_x = $1 and P_z = $3. She purchases x = 6 and z = 8. Draw her budget lines and choic
- Angela always takes one cup of cookies with one cup of coffee. Cookies cost $2 per cup, and coffee costs $1 per cup. Angela has $12 to spend on cookies and coffee. Consider a price drop in cookies to $1 per cup. Illustrate Angela s optimal consumption bun
- Every morning, Stephanie has a breakfast that consists of milk (m) and bagels (b) with the utility function of U(b, m) = b2/3m1/3. Bagels cost $2 each and milk costs $1 per cup. Her daily expenditure on breakfast is $12. a) Suppose that she consumes 2 bag
- Up to 500 customers a day line up to buy Avalon's breads, scones, muffins, and coffee. Staffing and management are worries. Avalon now employs 35 and plans to hire 15 more. Its payroll will climb by 3
- Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. a. Complete the table by filling in the blank spaces. b. Suppose Keeg
- Jennifer Borts moves her office from the premises she rents at a local mall to her home. What is the result of this move? a. Jennifer's opportunity costs fall. b. Jennifer's total costs fall. c. Jennifer's explicit costs fall and her implicit costs rise.
- The cookie company in the mall hires only labor to produce cookies. The workers are paid $80 per day, and the cost of renting the space in the mall is $350 per day. 1) The daily fixed costs of production are: A. $80 B. $430 C. $350 D. $160 E. $0
- John is thinking about setting up a doughnut van. The van itself costs $200. The ingredients for each doughnut cost $0.50. a. What is the fixed cost of doing business in the short-run? b. What is the variable cost per doughnut in the short-run? c. Constru
- Floyd's Coffee Shop collects on the average $10 per customer. Its variable cost per customer averages $6, and its annual fixed cost is $60,000. In order to break even, it must serve how many customers
- Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $20
- Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $30
- Coffee and donuts are complements. Suppose a major storm destroys 50% of this year's coffee bean crop. As the manager of a donut shop, how will this affect your business? What will happen to the price of donuts?
- You are thinking of setting up a lemonade stand. The stand itself costs $200. The ingredients for each cup of lemonade cost $0.50. You charge $1.00 for each cup of lemonade. a. What is the fixed cost (FC) of doing business? b. What will be the total c
- Assume that fixed costs are $10. What is the average total cost of 4 cakes? A. $25.00 B. $12.00 C. $35.00 D. $9.50
- Brenda's Family Photos is a photographic portrait business in a perfectly competitive market in Fargo. The market price of a portrait is $25.00 The table shows Brenda's total costs. How many portra
- Brenda's Nice Nails is a manicuring business in a perfectly competitive market in lthaca. The market price of a manicure is $25 00. The table shows Brenda's total costs. How many manicures does Brenda
- Panera Bread has hired you as a consultant to determine the optimal pricing strategy for its coffee and bagel products. You have determined that Panera has two basic types of customers: those who are
- The average cost of producing 6 bagels is: \\ A. $0.10 B. $0.15 C. $0.20 D. $0.80 \\
- Kristina quits her job as a chef earning $40,000 per year to start her own business (bakery). To save money she operates her business out of a small building she owns which she had rented out for $11,
- Sarah earns $500 per week selling baskets made out of tree vines. With this money, she buys sushi and rose bushes. Each piece of sushi costs $1 and each rose bush costs $10. If Sarah spends $170 per w
- Every coffee shop in Jitterville has a fixed cost of $25 per day, a capacity of 25 cups of coffee per day, and a variable cost of $1.00 per cup of coffee. There are 110 coffee drinkers in Jitterville, each of whom will purchase one cup of coffee per day f
- Assume that coffee shops operate in a perfectly competitive industry. A single coffee shop, Brick and Mortar, decides to charge an entrance fee in addition to charges for its coffee and pastry. Which of the following is most likely to happen? A. Brick an
- The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pants. In 2008, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2009, bread
- At Sarah's Bakery, the cost of making one cake is $1.00. If Sarah sells 20 cakes and gains a producer surplus of $40.00, then Sarah must be selling her cakes for what price?
- If a frost kills a significant amount of the Brazilian coffee crop, we can expect: a. the price of coffee to rise b. the quantity of coffee consumed to fall c. the price of tea to rise if coffee and tea are substitutes d. the supply of coffee to decrease
- Beatrice has calculated the fixed costs for the Deli are $14,000 per month, and each meal costs $2.50. a) Will profits go up or down as a result of the price cut? b) By How much?
- A bakery currently sells chocolate chip cookies at a price of $16/dozen. The MC is $8/dozen. The cookies are becoming more popular with customers, and so the bakery owner is considering raising the price to $20/dozen.
- The average cost of making 10 cakes is $2.80. The average cost of making 11 cakes is $3.00. The marginal cost of the 11th cake is A. $0.20 B. $2.00 C. $3.00 D. $5
- At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling 10 danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for: a. $2 each b. $0.50 each c. $3.50 each d. $5 each
- Part A) The cafe manager estimates that daily demand for cakes is represented by Q = 121.67 - 6.67P where: P = price per cake in dollars Q = number of cakes sold per day. Current average daily sales of cakes are 60. What price is the cafe currently chargi
- You own a coffee shop. Labor is your only variable input. Your fixed costs are the cost of your rent on the shop and the cost of your milk steamer, which add up to $1200. The wage paid to each worker
- Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: | | |Big Brew|Big Brew | | |High Price |
- At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is
- The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pants. In 2008, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2009, brea
- The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pants. In 2008, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In
- The average total cost (ATC) of producing a bell is $5 when Jenny's Jingles produces 100 bells. Total cost when zero bells are produced is $250. Average fixed cost (AFC) when 100 bells are produced is equal to A) $2.50 B) $5.00 C) $7.50 D) $10.00
- John is thinking about setting up a doughnut van. The van itself costs $200. The ingredients for each doughnut cost $0.50. a. In one diagram, illustrate total cost, total fixed cost, and total variable cost. b. In another diagram, directly below the previ
- At Nick's Bakery, the cost to make homemade chocolate cake is $3 per cake. As a result of selling three cakes, Nick experiences a producer surplus in the amount of $19.50. Nick must be selling his cakes for: a. $6.50 each. b. $7.50 each. c. $9.50 each. d.
- Jennifer divides her income between coffee and croissants (both of which are normal goods). An early frost in Brazil causes a large increase in the price of coffee in the United States. a. Show the effect of the frost on Jennifer s budget constraint. b. S
- Draw the budget line for the following situation: You have an income of $30 to spend on pumpkin scones and triple venti sugar free, non fat, no foam, extra caramel, with whip, caramel macchiatos. The
- Assume that you have a budget of $30 to spend on milk and cereal only. The price of milk is $5.00 and the price of cereal is $3.50. a. What is the most you can purchase of cereal? b. If you purchase 3 units of milk, how many units of cereal can you purcha
- On June 30, 2011, the price of 5,000 ounces of silver for December 1, 2013, was about $36 an ounce (or $180,000 for all 5,000 ounces). Suppose Chloe believes that the price of an ounce of silver in December 2013 will be $20. Should Chloe agree to buy or s
- Please show all work. (a) A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 65 pounds per week. The beans are purchased from a local supplier for $4 per pound. The coffeehouse
- Suppose your grandmother gave you $25 for your birthday and you decided to spend all of it on candy bars and bags of popcorn. The price of a candy bar is $1.25 and the price of a bag of peanuts is $3.75. What is the slope of the budget line?
- In the calculation of the CPI, coffee is given greater weight than tea if: a. consumers buy more coffee than tea. b. the price of coffee is higher than the price of tea. c. it costs more to produce coffee than it costs to produce tea. d. coffee is more re
- The coffee shop near the local college normally sells 10 ounces of roasted coffee beans for $10. But the shop sometimes puts the beans on sale. During some sales, it offers "33% more for free." Other weeks, it takes "33% off" the normal price. After revie
- Suppose that Kim owns a coffee shop, and the coffeSuppose that Kim owns a coffee shop, and the coffee business is perfectly competitive. On a daily basis, her fixed cost from machinery is $30. Her dai
- Jessica spends her entire weekly budget of $50 on chocolate milk and peanut butter sandwiches. Milk costs $5 per bottle and sandwiches cost $10 each. Both are normal goods. The utility that Jessica receives from peanut butter sandwiches and chocolate milk
- An unusual bountiful crop of coffee beans might be expected to: a) lower the price of tea. b) reduce the price of coffee. c) increase the quantity of coffee consumed. d) All of the above
- A coffee shop is considering expanding. It currently has 15 workers who share five coffee makers (big industrial espresso-making machines). A few months ago, the cafe added two coffee makers, and output increased by 50,000 orders per month. About a month
- RawDeal is the new sushi bar in the neighborhood. Their estimated marginal cost is 10 cents per sushi unit. RawDeal estimates that each consumer has a demand for sushi given by q = 20-10 p, where q is number of sushi units and p is price in dollars per un
Explore our homework questions and answers library
Browse
by subject