Question: A company should make a decision about two consecutive capacity increasing investments. Their total cost functions are given respectively: TC1 = 0.02q2+120q+20000. TC2 = 0.05q2+72000

  • A company should make a decision about two consecutive capacity increasing investments. Their total cost functions are given respectively:

  • TC1 = 0.02q2+120q+20000.

  • TC2 = 0.05q2+72000

  • TC3 = 0.03q2+50q+67500

  • Find the optimal scale for the long-run.

  • Interpret the results.

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