Suppose that wine industry has verystrong external increasing return to scales (IRS). France is the only country producing wine now,and France's average production cost of producing wine reflecting its external IRS can be writtenas20ACF (x) =1+ xThe global demand of wine can be written asD = 20 – 10x.Assume that Korea's average cost of producing wine is written asАСк (х)1+ xIf a Korean firm starts producing wine, what would be the global wine consumption in the equi-librium? Use a diagram to explain your answer. Your diagram should include the values for y- orx- axes, and intersection point(s) if needed.

As returns to scale increase, the cost per unit of output decreases as the business grows. This…

Suppose that wine industry has very strong external increasing return to scales (IRS). France is the only country producing wine now, and France's average production cost of producing wine reflecting its external IRS can be written as ACF (x) = The global demand of wine can be written as 20 1 + x D = 20 - 10x. Assume that Korea's average cost of producing wine is written as 2 1 + x ACK (x) = If a Korean firm starts producing wine, what would be the global wine consumption in the equi- librium? Use a diagram to explain your answer. Your diagram should include the values for y- or x- axes, and intersection point (s) if needed.

Suppose that wine industry has very strong external increasing return to scales (IRS). France is the only country producing wine now, and France's average production cost of producing wine reflecting its external IRS can be written as ACF (x) = The global demand of wine can be written as 20 1 + x D = 20 - 10x. Assume that Korea's average cost of producing wine is written as 2 1 + x ACK (x) = If a Korean firm starts producing wine, what would be the global wine consumption in the equi- librium? Use a diagram to explain your answer. Your diagram should include the values for y- or x- axes, and intersection point (s) if needed.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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