a. A firm's long-run total cost can be written as LTC = 3000Q - 50Q2 + (1/3)Q3 and its long-run marginal cost by LMC = 3000 - 100Q + Q2. Find the range over which the firm will experience economies of scale. Explain your answer.
a. A firm's long-run total cost can be written as LTC = 3000Q - 50Q2 + (1/3)Q3 and its long-run marginal cost by LMC = 3000 - 100Q + Q2. Find the range over which the firm will experience economies of scale. Explain your answer.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 19PAE
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a. A firm's long-run total cost can be written as LTC = 3000Q - 50Q2 + (1/3)Q3 and its long-run marginal cost by LMC = 3000 - 100Q + Q2. Find the range over which the firm will experience economies of scale. Explain your answer.
b. A firm has a production function of Q = K * L + L, where the marginal product of labor is MPL = K + 1 and the marginal product of capital is MPK = L. The wage rate (W) is $100 per worker and the rental price (R) is $100 per unit of capital. In the short-run, capital (K) is fixed at 4. Find the minimum total cost of production in the short- and long-run if the firm produces 100 units of output.
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