Suppose the inputs and outputs for Carbon Credits are shown below. $$\begin{array} { c c c c c }
\hline { \quad\quad\quad\quad\quad\text { Inputs } } \
\hline \text { Output } & \text { Capital } & \text { Labour } & \text { Total Cost } & \text { LRAC } \
100 & 1 & 4 & & \
200 & 2 & 7 & \
300 & 3 & 10 & & \
400 & 4 & 14 & & \
500 & 5 & 19 & \
600 & 6 & 25 & & \
\hline
\end{array}$$ a) If capital cost $40 per unit and labour costs $12 per unit fill in the blanks in the table above.
b) At what output do increasing returns come to an end?
c) What is the shape of the LRAC curve?
d) Graphically, what would happen to the LRAC curve if the cost of capital dropped to $30 per unit?

Question

Suppose the inputs and outputs for Carbon Credits are shown below. $$\begin{array} { c c c c c } 
\hline { \quad\quad\quad\quad\quad\text { Inputs } } \
\hline \text { Output } & \text { Capital } & \text { Labour } & \text { Total Cost } & \text { LRAC } \
100 & 1 & 4 & & \
200 & 2 & 7 & \
300 & 3 & 10 & & \
400 & 4 & 14 & & \
500 & 5 & 19 & \
600 & 6 & 25 & & \
\hline
\end{array}$$ a) If capital cost $40 per unit and labour costs $12 per unit fill in the blanks in the table above.
b) At what output do increasing returns come to an end?
c) What is the shape of the LRAC curve?
d) Graphically, what would happen to the LRAC curve if the cost of capital dropped to $30 per unit?

Quizplus · Accepted Answer

The Answer of Suppose the inputs and outputs for Carbon Credits are shown below. $$\begin{array} { c c c c c } 
\hline { \quad\quad\quad\quad\quad\text { Inputs } } \
\hline \text { Output } & \text { Capital } & \text { Labour } & \text { Total Cost } & \text { LRAC } \
100 & 1 & 4 & & \
200 & 2 & 7 & \
300 & 3 & 10 & & \
400 & 4 & 14 & & \
500 & 5 & 19 & \
600 & 6 & 25 & & \
\hline
\end{array}$$ a) If capital cost $40 per unit and labour costs $12 per unit fill in the blanks in the table above.
b) At what output do increasing returns come to an end?
c) What is the shape of the LRAC curve?
d) Graphically, what would happen to the LRAC curve if the cost of capital dropped to $30 per unit?

Suppose the Inputs and Outputs for Carbon Credits Are Shown