A survey of costs and output is carried out for eight firms in an industry that have

different plant sizes. The results are:

Output (x100)

50

134

90

178

84

200

152

108

Costs ($'000)

23

56

42

75

38

84

64

48

a. Estimate an appropriate cost function in the industry.

b. Estimate costs for a firm producing 12,000 units.

c. What can be said about returns to scale in the industry? Give your reasoning.

d. Estimate average costs at 12,000 units.

e. Estimate the marginal cost of the 12,000th unit.

f. If the going price in the industry is $4.60, calculate the break-even output.