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a) Draw and upload an image of a graph of marginal revenue and marginal cost for...

a) Draw and upload an image of a graph of marginal revenue and marginal cost for a transportation firm. Assume that the firm is a price taker and that there is sufficient demand, that is, assume they face constant marginal revenue. Also assume that the firm experiences economies of scale at lower quantities, but diseconomies of scale at higher quantities.

b) On you graph, Identify the profit maximizing quantity of production for the firm.

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Answer #1

In the graph you can see that the company is a price taker hence is from a perfect competition. Hence the MC and MR curve are shown. The graph also shows the Average variable and long tern average fixed cost. CATE ARIMR Pendnuel cott LAVE I AR MR - Price Output2) The maximizing quantity is the Q1 where the particular MC cuts the MR curve.

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