2.12 Same Average Cost with Different Quantities? Sup pose there are two pencil producers with identical pro duction facilities—identical factories and equipment.

The firms pay the same wages and pay the same prices for materials. Sam has a small workforce and produces 1,000 pencils per minute; Marian has a medium-size workforce and produces 2,000 pencils per minute. The two firms have the same average total cost of 10 cents per pencil. Suppose you build a production facility identical to the ones used by the other firms and hire enough workers and buy enough materials to produce 2,500 pencils per minute. Would you expect your aver age cost to be 10 cents per pencil (like the other two firms), less than 10 cents, or more than 10 cents?

Production and Cost in the Long Run Draw the long-run marginal-cost and average-cost curves.