(7) Suppose Dr Savage would like to write an new economic textbook, and given his understanding of economics he estimates the long run total cost of writing to be LT C = 20, 000Q 200Q2 + Q3 and his long-run marginal cost as LMC = 20, 000400Q+ 3Q2 , where (Q) is measured as thousands of words. (Total 4 Marks)

(a) Calculate Dr Savage's long-run average cost of writing by dividing the total cost by Q. (1 Mark)

(b) Calculate the quantity where LAC is at a minimum, using the relationship between LMC and LAC. (1 Mark)

(c) What is the lowest possible average cost at which Dr Savage can write? (1 Mark)

(d) Calculate the ranges over which Dr Savage experience economies of scale and diseconomies of scale. (1 Mark)