Which of these is economic profit equal to?

1. As gas prices rise, it causes most firms' short-run variable costs to also increase since most firms use gasoline to some extent, thereby increasing the AVC, MC, and ATC.2. Rece

Which of these is economic profit equal to?

1. As gas prices rise, it causes most firms' short-run variable costs to also increase since most firms use gasoline to some extent, thereby increasing the AVC, MC, and ATC.

2. Recently there have been a number of start-up firms that have been able to take advantage of economies of scale by spreading product development costs and advertising costs over larger and larger units of output and by using greater specialization of labor, management, and capital.

3. I n 1996 Verson (a firm located in Chicago) introduced a stamping machine the size of a house weighing as much as 12 locomotives. This $30 million machine enables automakers to produce in 5 minutes what used to take 8 hours to produce. To justify use of this machine, the auto manufacturer has to be a large producer, so that the fixed costs of the machine are spread over a large output.

4. With the internet there's a decrease in news readership and advertising in newspapers raising AFC

5. This results in a higher AFC (fixed costs are spread out over a smaller level of output) forcing newspaper companies to increase their prices which causes a further reduction in news readership, resulting in many newspaper companies to go bankrupt.

6. The aircraft assembly and ready-mixed concrete industries provide extreme examples of differing MESs. Economies of scale are extensive in manufacturing airplanes, especially large commercial aircraft. As a result, there are only two firms in the world (Boeing and Airbus) that manufacture large commercial aircraft. The concrete industry exhausts its economies of scale rapidly, resulting in thousands of firms in that industry.

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