(Hint: The variable cost of two pies is just the marginal cost of the first pie, plus the marginal cost of the second, and so on.)

b. Indicate the range of pies for which the spreading effect dominates and the range for which the diminishing returns effect dominates.

c. What is Alicia’s minimum - cost output? Explain why making one more pie lowers Alicia’s average total cost when output is lower than the minimum - cost output.

Similarly, explain why making one more pie raises Alicia’s average total cost when output is greater than the minimum - cost output