Problem: Column 1, 2, 3, is derived from a firm’s long run expansion path. The price of capital is $50 and the price of labor is $30
|
Out put
|
Capital
|
Labor
|
Total cost long run
|
Long run average cost
|
Long run marginal cost
|
|
20
|
8
|
12
|
|
|
|
|
40
|
15
|
20
|
|
|
|
|
60
|
25
|
35
|
|
|
|
|
80
|
40
|
50
|
|
|
|
Using the above table, answer the following questions
1. Economies of scale exist through_____________ units of output because________ is _______________.
2. At 20 Units of output LTC= $________________ and LAC = $ _____________. Between zero and 20 units LMC= $_____________.
3. At 40 units of output LTC = $___________ and LAC = $__________. Between 20 and 40 units LMC = $________.
4. Diseconomies of scale exist beyond________ units of output because _______ is __________.
5. At 60 units of output LTC = $ _______ and LAC = $_________. Between 40 and 60 units LMC= $___________.
6. At 80 units of output LTC = $__________ and LAC= $________ . Between 60 and 80 units LMC = $_________.