Exercise 2 (15 points)
Consider the Company \"Y\" who produces air conditioning (AC)
devices using 3 different technologies. Table below shows the total
cost (TC) corresponding to each technology for a given AC
produced in a day. Company \"Y\" adopts the proper technology to
produce the AC product.
Instructions:
? Find and draw the long run average total cost (ATC) curve (one
graph). Explain the shape of this long run ATC, why it has the
shape you found?
? What is the minimum efficient scale (MES)?
? Draw the ATC for each technology (in one graph, put
all 3 ATC curves). Explain the reasons of the shape
of ATC for each technology.
Explain with words, computations + graphs
Total Cost (TC)
Output Technology1 Technology2 Technology3
(Q)
1 40 20 32
2 50 32 38
3 60 45 42
4 70 62 60
5 85 84 80
6 200 110 120
7 300 160 180