In the lemonade stand industry, Lucia is representative of a low-cost producer, and Carlos is representative of a high-cost producer. The minimum average total cost of the high-cost producers is $5. The low-cost producers have a long-run total cost curve given by LTC = 5Q –1.5Q² + 0.33Q³, where LMC = 5 - 3Q + Q². In this case, Lucia can earn an economic rent of $. as a low-cost producer. 0 6 4.50 7.50 O O O O

In the lemonade stand industry, Lucia is representative of a low-cost producer, and Carlos is representative of a high-cost producer. The minimum average total cost of the high-cost producers is $5. The low-cost producers have a long-run total cost curve given by LTC = 5Q –1.5Q² + 0.33Q³, where LMC = 5 - 3Q + Q². In this case, Lucia can earn an economic rent of $. as a low-cost producer. 0 6 4.50 7.50 O O O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2.2
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Demand for microprocessors is given by P = 35 – 5Q , where Q is the quantity of microchips (in millions). The typical firm’s total cost of producing a chip is Ci = 5qi, where qi is the output of firm i. a) Does the typical microchip firm display increasing, constant, or decreasing returns to scale? What would you expect about the real microchip industry? In general, what must be true about the underlying technology of production for competition to be viable?
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