The following data are available for output (Q) and Long Run Total Cost (LTC) for a firm. Using appropriate calculations determine the range of outputs over which the firm’s technology exhibits Increasing, Decreasing or Constant Returns to Scale. (Doh)
I trying to study for an exam and I've been at this problem for hours. I just don't get it. can anyone answer this one for me.
thanks in advance
April 24th 2010, 06:11 AM
You should look at the additional cost of producing one more unit (marginal cost). For example the MC of the first unit is 33, the MC of the second is 21 (54-33). Do this for all the units and you will have your answer.