The figure below illustrates a series of short-run cost curves numbered AC₁ through AC₄, which correspond to the only four different plant sizes possible. a) What can you say about returns to scale?
b) Are economies of scale present?
c) If it takes 6 workers and 30 units of capital to produce 10 units of output, how much labour and capital are necessary to produce 20 units of output?

Question

The figure below illustrates a series of short-run cost curves numbered AC₁ through AC₄, which correspond to the only four different plant sizes possible.

The figure below illustrates a series of short-run cost curves numbered AC<sub>1</sub> through AC<sub>4</sub>, which correspond to the only four different plant sizes possible. a) What can you say about returns to scale? b) Are economies of scale present? c) If it takes 6 workers and 30 units of capital to produce 10 units of output, how much labour and capital are necessary to produce 20 units of output?

a) What can you say about returns to scale?
b) Are economies of scale present?
c) If it takes 6 workers and 30 units of capital to produce 10 units of output, how much labour and capital are necessary to produce 20 units of output?

Quizplus · Accepted Answer

The Answer of The figure below illustrates a series of short-run cost curves numbered AC₁ through AC₄, which correspond to the only four different plant sizes possible. a) What can you say about returns to scale? b) Are economies of scale present? c) If it takes 6 workers and 30 units of capital to produce 10 units of output, how much labour and capital are necessary to produce 20 units of output?

The Figure Below Illustrates a Series of Short-Run Cost Curves