1. Micky's auto mechanic shop has a daily total cost represented by: C = 98 + 2q + 2q². Shop's marginal cost is given by: MC = 2 + 4q, where q is the number of repaired cars. a. Derive an expression for average cost. Find the quantity range where the shop experiences the economies scale (Hint: scale economy index is given by: S = AC). c. At what production level are scale economies exhausted²? b.

1. Micky's auto mechanic shop has a daily total cost represented by: C = 98 + 2q + 2q². Shop's marginal cost is given by: MC = 2 + 4q, where q is the number of repaired cars. a. Derive an expression for average cost. Find the quantity range where the shop experiences the economies scale (Hint: scale economy index is given by: S = AC). c. At what production level are scale economies exhausted²? b.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 8SCQ: Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are...

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