1) Consider the long-run production of shirts. The cost of the indivisible inputs used in the production of shirts is $400 per day. To produce one shirt per day, the firm must also spend a total of $55 on other inputs-labour, materials, and other capital. For each additional shirts, the firm incurs the same additional cost of $55. a) Compute the average cost for 50 shirts, 100 shirts, 130 shirts, and 200 shirts. b) Draw the long-run average cost curve for 50,100,130 and 200 shirts per day.

1) Consider the long-run production of shirts. The cost of the indivisible inputs used in the production of shirts is $400 per day. To produce one shirt per day, the firm must also spend a total of $55 on other inputs-labour, materials, and other capital. For each additional shirts, the firm incurs the same additional cost of $55. a) Compute the average cost for 50 shirts, 100 shirts, 130 shirts, and 200 shirts. b) Draw the long-run average cost curve for 50,100,130 and 200 shirts per day.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3CQQ

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