8 How would each of the following affect average total cost, average variable cost, and marginal cost? An increase in the cost of the lease of the firm’s building A reduction in the price of electricity A reduction in wages A change in the salary of the president of the company 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? A copy shop A hardware store A dairy A newspaper An automobile manufacturer 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 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: http://www.saylor.org/books/ Saylor.org 457