Now suppose the first plant has an avoidable fixed cost of 4, the cost function for the
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Now suppose the first plant has an avoidable fixed cost of 4, the cost function for the second plant remains the same. That is, C 1(Q1) = 0 if Q1 = 0 5 Q1 + 5 if Q1 > 0 and C2(Q2) = Q2 + 2(Q2) 2 . 3. If the firm produces total output quantity Q > 0, how will the firm divide total output Q = Q1 + Q2 between the two plants in order to minimize total costs? For which levels of total output Q is it better to avoid the fixed cost by only using plant 2 to produce the entire output Q
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