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QUESTION

The table shows the production function of Betty's Pies:

Betty must pay $100 a day for each oven she rents and $75 a day to each person she hires.

a. Find and graph the average total cost curve for each plant size.

b. Draw Betty’s long-run average cost curve.

c. Over what output range does Betty experience economies of scale?

d. Explain how Betty uses her long-run average cost curve to decide how many ovens to rent.

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