The expansion path of a firm gives five different quantities of output such as 10,20,30,40 and 50 units; and the price of labor is $25 and the price of capital is $100 per unit. The table shows the long-run costs of the firm at given quantities of output. QLKLTC( $)LAC( $)LMC ($)106420360036036020120407000350340302005810800360380402888015200380440504409020000400480 a. With the help of graph, analyze the properties of LAC and LMCb. Interpret and evaluate the numerical and graphical data and illustrate the relationship between LAC and LMC

Price of labor = $25 Price of per unit capital = $100 Long-run costs of the firm at given…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The expansion path of a firm gives five different quantities of output such as 10,20,30,40 and 50 units; and the price of labor is $25 and the price of capital is $100 per unit. The table shows the long-run costs of the firm at given quantities of output.

Q	L	K	LTC( $)	LAC( $)	LMC ($)
10	64	20	3600	360	360
20	120	40	7000	350	340
30	200	58	10800	360	380
40	288	80	15200	380	440
50	440	90	20000	400	480

a. With the help of graph, analyze the properties of LAC and LMC

b. Interpret and evaluate the numerical and graphical data and illustrate the relationship between LAC and LMC

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