What is the firms long run average cost curve

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Reference no: EM13332027

A firm chooses between two production technologies for a new product line. Technology 1 has total costs of production: C1 (q) = 45 + 20q + 2q^2. Technology 2 has total costs of production: C2 (q) = 20 + 20q + 3q^2.

a) What technology is more efficient from a cost standpoint if the expected output is very low, say, 1 unit? Explain intuition behind your answer without explicit calculations of costs.

b) What technology is more efficient from a cost standpoint if the expected output is very high, say 1000 units? Explain intuition behind your answer without explicit calculations of costs.

c) What is the firms long run average cost curve?

Reference no: EM13332027

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