The following table indicates the average total cost of producing varying quanti

Question

The following table indicates the average total cost of producing varying quantities of output from three different plants. (a) On the graph below, which curve is associated with the average total costs of the large firm? (b) Which plant should be used to produce 60 units? small Firm Medium Firm Large Firm (c) What plant(s) should be used to produce 100 units? One large plant One small and One medium plant Two small plants One medium and one large plant Two medium plants (d) Do economies of scale exist anywhere in these plant size choices?

Explanation / Answer

a) curve c.

b)Medium firm.

Explanation-Cost is minimum for medium firm than large ,small.

c)One large plant.

ExplanationFrom given data we can see that cost is minimum for large plant than small and medium plants.

d)No.

Explanation-As here after certain range output increases and cost is also increased.But economies scale means the inverse relationship between cost and output.

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