10 20 30 The following table indicates the average total cost of producing varying quantities of output from three different plants: Rate of output 90 100 40 50 60 70 80 Average total cost Small firm Medium firm Large firm $600 $500 $400 $500 $600 $700 $800 $900 $1,000 $1,100 800 650 500 350 200 300 400 500 1,000 900 800 700 600 500 400 300 600 700 400 500 (a) Plot the ATC curves for all three firms on the graph. (b) Which plant(s) should be used to produce 40 units? (c) Which plant(s) should be used to produce 100 units? (d) Are there economies of scale in these plant size choices?
10 20 30 The following table indicates the average total cost of producing varying quantities of output from three different plants: Rate of output 90 100 40 50 60 70 80 Average total cost Small firm Medium firm Large firm $600 $500 $400 $500 $600 $700 $800 $900 $1,000 $1,100 800 650 500 350 200 300 400 500 1,000 900 800 700 600 500 400 300 600 700 400 500 (a) Plot the ATC curves for all three firms on the graph. (b) Which plant(s) should be used to produce 40 units? (c) Which plant(s) should be used to produce 100 units? (d) Are there economies of scale in these plant size choices?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter7: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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The following table indicates the average total cost of producing varying quantities of output from three different plants:
Rate of output
90
100
40
50
60
70
80
Average total cost
Small firm
Medium firm
Large firm
$600 $500 $400 $500 $600 $700 $800 $900 $1,000 $1,100
800 650 500 350 200 300 400 500
1,000 900 800 700 600 500 400 300
600
700
400
500
(a) Plot the ATC curves for all three firms on the graph.
(b) Which plant(s) should be used to produce 40 units?
(c) Which plant(s) should be used to produce 100 units?
(d) Are there economies of scale in these plant size choices?
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