Table Q1(c) shows the long-run total cost information for Firms A, B, C and D in ahypothetical industry. The cost currency is in Ringgit Malaysia (RM).Table Q1(c): Long-run total cost informationQuantity 1233403504567Firm AFirm B2101808508004906601,2901,0501,0501,0501,060930510660Firm C120250390540700870Firm D450750150300600900Explain:(i) Which firm experiences constant return to scale over the entire range ofoutput.(ii) Which firm experiences diseconomies of scale over the entire range of output.(iii) Which firm experiences economies of scale over the entire range of output.

There will be constant returns to scale when the average cost in the long run remains constant at…

Table Q1(c) shows the long-run total cost information for Firms A, B, C and D in a hypothetical industry. The cost currency is in Ringgit Malaysia (RM). Table Q1(c): Long-run total cost information | Quantity 1 Firm A Firm B Firm C 2 3 4 660 660 540 5 6 7 1,290 1,050 1,050 1,050 210 340 350 250 300 490 850 1,060 930 180 510 800 120 390 700 870 Firm D 150 450 600 750 900 Explain: (i) Which firm experiences constant return to scale over the entire range of output. (ii) Which firm experiences diseconomies of scale over the entire range of output. (iii) Which firm experiences economies of scale over the entire range of output.

Table Q1(c) shows the long-run total cost information for Firms A, B, C and D in a hypothetical industry. The cost currency is in Ringgit Malaysia (RM). Table Q1(c): Long-run total cost information | Quantity 1 Firm A Firm B Firm C 2 3 4 660 660 540 5 6 7 1,290 1,050 1,050 1,050 210 340 350 250 300 490 850 1,060 930 180 510 800 120 390 700 870 Firm D 150 450 600 750 900 Explain: (i) Which firm experiences constant return to scale over the entire range of output. (ii) Which firm experiences diseconomies of scale over the entire range of output. (iii) Which firm experiences economies of scale over the entire range of output.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 8MC

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