long-run versus short-run eeonomie eost Suppose Ralph's long-run eeonomie eost eurve is given by C(q) = 300q - 20q2 + q3.

We presume an industry eharaeterized by perfect eompetition; eonsequently, Ralph operates at the point q = 10, where average eost is a minimum.

a] Tabulate total eost, marginai eost, ineremental eost, and average eost for qE{0,l,2,3, ... ,20}. AIso plot average eost and marginai eost for 0 s q s 20.

b] Now eonsider a partieular short-run eost eurve given by CSR(q) = F + 290q _ 21q2 + l.1q3.

Determine F if we are to interpret CSR( q) as some short-run eost eurve eonsistent with Ralph's long-run eost eurve and an effieient scale of q = 10 units.

el Plot the resulting average and marginai short-run eost, for 0 s q s 20. Contrast this with their long-run eounterparts. The best way to do this is to plot all four curves on the same graph.

AppendixLO1