Draw the Long-Run Cost Curve. Consider the long-run production of shirts. The cost of the indivisible inputs used in the production of shirts is $400 per day. To produce 1 shirt per day, the firm must also spend a total of $5 on other inputs labor, materials, and other capital. For each additional shirt, the firm incurs the same additional cost of $5.
a. Compute the average cost for 40 shirts, 100 shirts, 200 shirts, and 400 shirts.
b. Draw the long-run average-cost curve for 40 to 400 shirts per day.