Marc Nerlove conducted a classic study on economies of scale in the electric utility industry. I took his data and estimated a cost function for electric utilities. The estimated total cost function I obtainedis: TC = .03*Q.72*PL.44*PF.43*PK-.22. Based on these results, you can conclude that these firms are experiencing:   A. Economies of Scale.   B. Constant Economies of Scale.   C. Diseconomies of Scale. None of the above

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
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Marc Nerlove conducted a classic study on economies of scale in the electric utility industry. I took his data and estimated a cost function for electric utilities. The estimated total cost function I obtainedis: TC = .03*Q.72*PL.44*PF.43*PK-.22. Based on these results, you can conclude that these firms are experiencing:

 

A.

Economies of Scale.

 

B.

Constant Economies of Scale.

 

C.

Diseconomies of Scale.

  1. None of the above
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