7. A firm can build a plant of three different sizes. The short-run average total cost curves ofeach size plant are as follows:Plant APlant BPlant COutput Average Total CostOutput Average Total CostOutput Average Total Cost120203020505184020502010156010400320208020600825401005080020What is the long-run average cost of producing 20 units of output? Why?

Answered: A firm can build a plant of three…

A firm can build a plant of three different sizes. The short-run average total cost curves of each size plant are as follows:

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 9SQP

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Question

7. A firm can build a plant of three different sizes. The short-run average total cost curves of
each size plant are as follows:
Plant A
Plant B
Plant C
Output Average Total Cost
Output Average Total Cost
Output Average Total Cost
1
20
20
30
20
50
5
18
40
20
50
20
10
15
60
10
400
3
20
20
80
20
600
8
25
40
100
50
800
20
What is the long-run average cost of producing 20 units of output? Why?

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