How to trace out the long-run average cost curve

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Reference no: EM13207180

Total Cost and Marginal Cost Complete the following table, assuming that each unit of labor costs $75 per day.

Quantity of labor/day Output/day Fixed Cost Variable Cost Total Cost Marginal Cost

0 ____ $300 $__ $__ $___
1 5 ___ 75 __ 15
2 11 ___ 150 450 12.5
3 15 ___ ___ 525 ___
4 18 ___ 300 600 25
5 20 ___ ___ ___ 37.5

Long Run Costs Suppose the firm has only three possible scales of production as shown below:
a. Which scale of production is most efficient when Q =65?
b. Which scale of production is most efficient when Q = 75?
c. Trace out the long-run average cost curve on the diagram

Reference no: EM13207180

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