Question
Suppose a firm's total cost curve can be written TC(Q) = Q - .5Q^2 + Q^3, with marginal cost MC(Q) = 1 - Q +
Suppose a firm's total cost curve can be written TC(Q) = Q - .5Q^2 + Q^3, with marginal cost MC(Q) = 1 - Q + 3Q^2. This cost function exhibits:
a) economies of scale
b) diseconomies of scale
c) neither diseconomies nor economies of scale.
d) economies of scale for output levels less than some level, Q1 = 1/4, and diseconomies of scale thereafter.
The answer is D, why? Pls explain, thx!
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Understanding Econometrics With Economic Applications
Authors: Dennis Halcoussis
1st Edition
0030348064, 9780030348068
