Question
John owns J&Co T-shirts and produces his t-shirts only using capital and labour. The table below represents his operation in the long run and provides
John owns J&Co T-shirts and produces his t-shirts only using capital and labour. The table below represents his operation in the long run and provides information about possible combinations of capital and labour she can use to produce t-shirts. Assume that no matter how much capital or labour he uses, the price of these inputs does not change.Suppose he is initially using 1 unit of capital and 2 units of labour, but he is considering increasing to 1.5 units of capital and 3 units of labour. How will this expansion affect his average total cost of production? You must explain your answer in 3 sentencesSuppose that john is now considering whether to increase his production from his initial 1 unit of capital and 2 units of labour to using 5 units of capital and 10 units of labour. How will this proposed expansion affect his average total cost of production. You must explain your answer in 3 sentences (consider factor change in labour/output/capital for the answer)
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