Question

4 Alumni dengan selama ini Tele--en onder mense 4. A firm's long-run total cost curve is TCQ)= 40 Q-10Q' + Overwh output does the production function exhibit economies of scale? Over what range does it exhibit diseconomies of scale? At what quantity is minimum efficient scale?

Answer 1

A production function exhibit economies of scale When MC<AC because when MC<AC it pulls the AC downwards and hence both average and marginal cost are decreasing as you keep on increasing the output which implies economies of scale. Economies of scale means having cost advantage in producing additional units of output.

Similarly diseconomies of scale happens when MC>AC when both MC and AC curve are rising implying costs are increasing for an additional increase in output.

Minimum efficient scale is the quantity at which MC= AC. It is the point at which plants produce at which its costs are minimized.

TCCC), 4003 - 10g? 03 AC = 40 - 10Q + P2 MC: STCCM) 40 - 2009 + 392 de meeAC when : 40 - 20Ⓡ + 302 < 40-100 + 092 .200 + 100 <-3p2+Q2 -log < -292 10 d > 202 † 202 - 100 CO 20 (-5) 50 Hence ewnomies of scall occur wher Q-5co e Q15 & mc> Ac; disewrwinius af scale occur when &>5. { we can also approach this question by working at the I range at which AC curve is increasing r Both the ranges over MCZAC and AC is rising are the same] AC: 40 - 1oQ +Q2.. C = -10 +20 >0 - 20 710 - 035 Diseconomies of scale Happen at 075 do minimum Eliyent scall happen at MC: Acie. 40 - 200 + 302 = 40 -100 + Q2 202 = 10Q 2002 -100 =0 201Q-5) =0 Q = 5 Minimum Efficient scale happen at a cs. Hence