1. Consider a firm with the following cost and inverse demand functions. Cost($) 20 9 3 Cost Function 1 2 3 quantity Price($) 16 13 10 Inverse Demand 2 3 quantity (a) What are the average costs of producing 1, 2, and 3 units for this firm? (b) What are the marginal costs of producing first, second, and third units for this firm? (c) Does this firm enjoy either economies or diseconomies of scale? (d) What are the profits of producing 1, 2, and 3 units for this firm? (e) When does the firm maximize its profit? Select from producing 1, 2, and 3 units.

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
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1. Consider a firm with the following cost and inverse demand functions.
Cost($)
20
3
Cost Function
N
3 quantity
Price($)
16
13
30
10
Inverse Demand
quantity
(a) What are the average costs of producing 1, 2, and 3 units for this firm?
(b) What are the marginal costs of producing first, second, and third units for this firm?
(c) Does this firm enjoy either economies or diseconomies of scale?
(d) What are the profits of producing 1, 2, and 3 units for this firm?
(e) When does the firm maximize its profit? Select from producing 1, 2, and 3 units.
Transcribed Image Text:1. Consider a firm with the following cost and inverse demand functions. Cost($) 20 3 Cost Function N 3 quantity Price($) 16 13 30 10 Inverse Demand quantity (a) What are the average costs of producing 1, 2, and 3 units for this firm? (b) What are the marginal costs of producing first, second, and third units for this firm? (c) Does this firm enjoy either economies or diseconomies of scale? (d) What are the profits of producing 1, 2, and 3 units for this firm? (e) When does the firm maximize its profit? Select from producing 1, 2, and 3 units.
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