A firm employs a production function Q = F( K, L) for which only two values of K are possible, K1 and K2 . Its ATC curve when K = K1 is given by ATC1 = Q2 - 4Q + 6. The corresponding curve for K = K2 is ATC2 = Q2 - 8Q + 18. What is this firm’s LAC curve?
Answer to relevant QuestionsIf a firm’s LMC curve lies above its SMC curve at a given level of output, what will be the relationship between its ATC and LAC curves at that output level?A firm with the production function Q = F (K, L) is producing an output level Q* at minimum cost in the long run. How will its short- run marginal cost when K is fixed compare with its short- run marginal cost when L is ...True or false: In a constant- cost industry, a tax of a constant, fixed amount on each unit of output sold will not affect the amount of output sold by a perfectly competitive firm in the long run. Explain.Same as Problem 6, except nowLTCQ = Q2 + 4QCould any firm actually have this particular LTC curve? Why or why not?The domestic supply and demand curves for Jolt coffee beans are given by P = 10 + Q and P = 100 - 2Q, respectively, where P is the price in dollars per bushel, and Q is the quantity in millions of bushels per year. The ...
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