Please answer question 9-a 9.The SolarFarm powerplant has both fixed and variable costs. As the plant expandsproduction, it first has constant returns to scale, and then diminishing returns to scale.(a) Draw a large graph showing (only) the firm's marginal costs and average totalcosts in a suitably labelled graph. Show on the graph where the firm'stechnology changes from constant-returns to diminishing-returns.SolarFarm is a monopolist with a downward sloping demand curve. Add toyour graph a demand and marginal revenue curve. Assume that the demandcurve intercepts the average cost curve at its minimum point. Show thequantity and price of electricity in this market.(b) The government connects SolarFarm to a nearby town that is currently withoutelectricity. Show in a new, large, graph how the market price and quantity ofelectricity sold change as a result.(c) Return to the situation in part (a) of this question. The government discovers anew technology that would allow SolarFarm to never experience diminishingreturns to scale in production. Should the government release this technologyto the firm? Explain using a graph.

A seller who has no other rivals in the market is said to be a monopolist. In the entire market, he…

9. The SolarFarm powerplant has both fixed and variable costs. As the plant expands production, it first has constant returns to scale, and then diminishing returns to scale. (a) Draw a large graph showing (only) the firm's marginal costs and average total costs in a suitably labelled graph. Show on the graph where the firm's technology changes from constant-returns to diminishing-returns.

9. The SolarFarm powerplant has both fixed and variable costs. As the plant expands production, it first has constant returns to scale, and then diminishing returns to scale. (a) Draw a large graph showing (only) the firm's marginal costs and average total costs in a suitably labelled graph. Show on the graph where the firm's technology changes from constant-returns to diminishing-returns.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 7PA

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