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Suppose that wages are $20,000 per season per person and land rent per acre is $3,000. Calculate the average cost of 150,000 bushels and the average cost of 325,000 bushels, using the figures in Test Yourself Question 6. (Note that average costs increase when output increases.) What connection do these figures have with the firm’s returns to scale?

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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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Section
BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 7, Problem 7TY
Textbook Problem
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Suppose that wages are $20,000 per season per person and land rent per acre is $3,000. Calculate the average cost of 150,000 bushels and the average cost of 325,000 bushels, using the figures in Test Yourself Question 6. (Note that average costs increase when output increases.) What connection do these figures have with the firm’s returns to scale?

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