00:01
A firm's long -run total costs are given in the table below.
00:04
Which of the following statements are correct? that over the production ranges 0 to 6 units, this firm experiences an economics of scale or this firm experiences constant returns to scale or over the production range of 0 to 8 units, this firm experiences this economics of scale or at range 6 to 8 units, the firm experiences this economics of scale.
00:31
So we're given the output and the long -run total cost.
00:34
Using the data in the table, the quantity and the long -run total cost, we can compute the average total cost as the total cost over the output.
00:44
For example, at output 2, the long -run total cost will be 28, right? the long -run total cost is 28.
00:57
So the average total cost at the 2 units will be the total cost at 2 units over 2 which is 28 over 2 and this is 14.
01:10
Now the computing atc for all the values of the output, we can compute the average total cost given the output and the long -run total cost.
01:29
So we already used the formula to find the average total cost at.
01:32
We already know that i want it 24.
01:35
So to continue, i'm 14 for number 2.
01:38
To continue, we're going to 10, 8 .5, 8, 8, 9 and 10.
01:47
So the firm is said to have economics of scale when the long -run average total, the long -run average cost is decreasing as it implies...