1. Economies of scale Web Slinger is an Internet service provider. In the long run, Web Slinger can provide Internet service for 20,000 homes each month at a total cost of $600,000, Internet service for 30,000 homes at a total cost of $750,000, or Internet service for 40,000 homes at a total cost of $800,000. Use the purple points (diamond symbol) on this graph to plot points of the long-run average cost curve at outputs of 20,000, 30,000, and 40,000 homes. 50 Average cost 40 30 10 10 20 30 40 50 HOMES SERVED (Thousands) AVERAGE COST (Dollars per home per month)
1. Economies of scale Web Slinger is an Internet service provider. In the long run, Web Slinger can provide Internet service for 20,000 homes each month at a total cost of $600,000, Internet service for 30,000 homes at a total cost of $750,000, or Internet service for 40,000 homes at a total cost of $800,000. Use the purple points (diamond symbol) on this graph to plot points of the long-run average cost curve at outputs of 20,000, 30,000, and 40,000 homes. 50 Average cost 40 30 10 10 20 30 40 50 HOMES SERVED (Thousands) AVERAGE COST (Dollars per home per month)
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 17P
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