9. long-run versus short-run economic cost Suppose Ralph’s long-run economic cost curve is again given by C(q; P) = 300q − 20q2 + q3 where q denotes output in this conveniently single product firm.

(a) Tabulate total and marginal cost for q ∈ {0, 1, 2, 3, ..., 20}. Also plot marginal cost for 0 ≤ q ≤ 20; and notice the efficient point is q = 10 units, where average cost for the single product firm is a minimum.

(b) Next consider a particular short-run cost curve given by CSR(q; P) = F + 290q − 21q2 + 1.1q3 Determine F if we are to interpret CSR(q; P) as some short-run cost curve consistent with Ralph’s long-run cost curve and an efficient scale of q = 10 units, so C(10; P) = CSR(10; P).

(c) Plot the resulting marginal short-run cost, for 0 ≤ q ≤ 20. Contrast this with their long-run counterparts. The best way to do this is to plot all four curves on the same graph.