Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. The table below shows average cost data for three differentsized plants-1, 2, and 3-which are the onlythree sizes possible.Output102030405060Plant 1$ 1,8001,4001,000800Plant 1:Plant 2:Plant 3:1,2001,800Plant 2$ 2,0501,8501,5507501,3501,850Plant 3$ 2,6002,2001,5001,0008501,300a. What is the value of AC at economic capacity in each of the three plants?b. What does your answer to (a) say about the shape of the LRAC curve?(Click to select)c. In which plant size is minimum efficient scale achieved?

Economic capacity refers to the level of production where average costs (AC) are minimized. Looking…

a. What is the value of AC at economic capacity in each of the three plants? Plant 1: Plant 2: Plant 3: b. What does your answer to (a) say about the shape of the LRAC curve? (Click to select) c. In which plant size is minimum efficient scale achieved?

a. What is the value of AC at economic capacity in each of the three plants? Plant 1: Plant 2: Plant 3: b. What does your answer to (a) say about the shape of the LRAC curve? (Click to select) c. In which plant size is minimum efficient scale achieved?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

The table below shows average cost data for three differentsized plants-1, 2, and 3-which are the only
three sizes possible.
Output
10
20
30
40
50
60
Plant 1
$ 1,800
1,400
1,000
800
Plant 1:
Plant 2:
Plant 3:
1,200
1,800
Plant 2
$ 2,050
1,850
1,550
750
1,350
1,850
Plant 3
$ 2,600
2,200
1,500
1,000
850
1,300
a. What is the value of AC at economic capacity in each of the three plants?
b. What does your answer to (a) say about the shape of the LRAC curve?
(Click to select)
c. In which plant size is minimum efficient scale achieved?

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Step 1: A. Calculate the value of AC at economic capacity in each of the three plants

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Step 3: c. Calculate plant size is minimum efficient scale achieved

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