A firm can build a plant of three different sizes. The short-run average total cost curves of each size plant are as follows:**Plant A:**- Output: 1, Average Total Cost: 20- Output: 5, Average Total Cost: 18- Output: 10, Average Total Cost: 15- Output: 20, Average Total Cost: 20- Output: 25, Average Total Cost: 40**Plant B:**- Output: 20, Average Total Cost: 30- Output: 40, Average Total Cost: 20- Output: 60, Average Total Cost: 10- Output: 80, Average Total Cost: 20- Output: 100, Average Total Cost: 50**Plant C:**- Output: 20, Average Total Cost: 50- Output: 50, Average Total Cost: 20- Output: 400, Average Total Cost: 3- Output: 600, Average Total Cost: 8- Output: 800, Average Total Cost: 20**Question:** What is the long-run average cost of producing 20 units of output? Why?

Answer to the question is as follows :

Answered: A firm can build a plant of three…

A firm can build a plant of three different sizes. The short-run average total cost curves of each size plant are as follows:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A firm can build a plant of three different sizes. The short-run average total cost curves of each size plant are as follows:

**Plant A:**
- Output: 1, Average Total Cost: 20
- Output: 5, Average Total Cost: 18
- Output: 10, Average Total Cost: 15
- Output: 20, Average Total Cost: 20
- Output: 25, Average Total Cost: 40

**Plant B:**
- Output: 20, Average Total Cost: 30
- Output: 40, Average Total Cost: 20
- Output: 60, Average Total Cost: 10
- Output: 80, Average Total Cost: 20
- Output: 100, Average Total Cost: 50

**Plant C:**
- Output: 20, Average Total Cost: 50
- Output: 50, Average Total Cost: 20
- Output: 400, Average Total Cost: 3
- Output: 600, Average Total Cost: 8
- Output: 800, Average Total Cost: 20

**Question:** What is the long-run average cost of producing 20 units of output? Why?

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