A new production technology for making vitamins is invented by a college professor who decides not to patent it. Thus, it is available for anybody to copy and use. The TC per bottle for production up to 100,000 bottles per day is given in the following table.

Output	TC	ATC
25,000	$80,000.00
50,000	100,000.00
75,000	105,000.00
100,000	110,000.00

Instructions: In part a, round your answers to 2 decimal places. In parts c and d, enter your answers as a whole number.

1. What is ATC for each level of output listed in the table? Enter your answers in the table above.
2. Suppose that for each 25,000-bottle per day increase in production above 100,000 bottles per day, TC increases by $5,000 (so that, for instance, 125,000 bottles per day would generate total costs of $115,000 and 150,000 bottles per day would generate total costs of $120,000). Are there economies of scale at all levels of output?

• Suppose that the price of a bottle of vitamins is $1.93. At that price, the total quantity demanded by consumers is 75,000,000 bottles. How many firms will be in this industry?

firm(s)

• Suppose that, instead, the market quantity demanded at a price of $1.93 is only 75,000. How many firms will be in this industry?

firm(s)

• Review your answers to parts b, c, and d. Does the level of demand determine this industry's market structure?

Compare your answer to part d of this problem with your answer to part d of problem 4. Do both production technologies show constant returns to scale?