Subsequent cost relationships for a single-product

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Reference no: EM1321653

Q. Consider the subsequent cost relationships for a single-product firm:

C(q)= 50 + 0.5q for q<7
C(q)= 7q for q> 7

a. Derive average also marginal cost for all integer outputs less than or equal to 7.

b. Illustrate what is average also marginal cost for all outputs above 7?

c. Illustrate what can you conclude on the basis of the calculations above?

d. Is there a minimum efficient scale of plant implied by these cost relationships? If so, illustrate what is it?

e. Let P be industry cost also Q be total industry output. If the industry demand curve is P = 84 - 0.5Q use the data from your above calculations to conclude illustrate what is the maximum number of efficient-sized firms that the industry can sustain.

f. How would your answer to e. change if industry demand were instead P = 14 - 0.5Q? Explain.

Reference no: EM1321653

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