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Yarn is a typical firm in the perfectly competitive textile industry. The production of fabric requires a constant-returns-to-scale technology for quantities of output (in thousands

Yarn is a typical firm in the perfectly competitive textile industry.

The production of fabric requires a constant-returns-to-scale technology for quantities of output (in thousands of rolls of fabric) that are less than 10 per day.

When the daily production is greater or equal to 10, decreasing returns to scale kick in.

Assume that the variable cost functions for the two production regions are:

VC = 30Q if Q <10

VC = 30Q + (Q - 10)2

if Q 10

In addition to variable costs, there are fixed costs of operation of $300 per day.

Please Illustrate in a graph the Total Cost, Fixed Cost, Variable Cost, Average Variable Cost, Average Cost and Marginal Cost lines

Q Fixed cost Variable cost Total Cost Average Variable Cost Average Cost Marginal Cost
0 300 0 300
1 300 30 330 330.00 30.00 30.00
2 300 60 360 180.00 30.00 30.00
3 300 90 390 130.00 30.00 30.00
4 300 120 420 105.00 30.00 30.00
5 300 150 450 90.00 30.00 30.00
6 300 180 480 80.00 30.00 30.00
7 300 210 510 72.86 30.00 30.00
8 300 240 540 67.50 30.00 30.00
9 300 270 570 63.33 30.00 30.00
10 300 300 600 60.00 30.00 30.00
11 300 331 631 57.36 30.09 31.00
12 300 364 664 55.33 30.33 33.00
13 300 399 699 53.77 30.69 35.00
14 300 436 736 52.57 31.14 37.00
15 300 475 775 51.67 31.67 39.00
16 300 516 816 51.00 32.25 41.00
17 300 559 859 50.53 32.88 43.00
18 300 604 904 50.22 33.56 45.00
19 300 651 951 50.05 34.26 47.00
20 300 700 1000 50.00 35.00

49.00

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