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A firm chooses between two production technologies for a new product line. Technology 1 has total costs of production: ????1 (????) = 100 + 10???? +
A firm chooses between two production technologies for a new product line. Technology 1 has total costs of production: ????1 (????) = 100 + 10???? + ????2. Technology 2 has total costs of production: ????1 (????) = 25 + 10???? + 4????2.
(a) What technology is more efficient (less costly) if the expected output is very low, say, 1 unit? Explain intuition behind your answer without explicit calculations of costs.
(b) What technology is more efficient (less costly) if the expected output is very high, say, 1000 units? Explain intuition behind your answer without explicit calculations of costs.
(c) Suppose that the firm can choose the technology for each level of output. What is the firms' average cost function AC (q) in this case
plz explain (a) not like c1(1) is greater than c2(1)
idk if we can simply compare the marginal cost as mc1=10+2q mc2=10+8q for (b)
plz explain the c with process, thx, i got when q is less than 5 and greater than5, different tech should be used, but idk what to do with the average cost.
