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The Cost of Production in the Long Run II Graded Assignment | Back tn Assignment Due Sunday 11.21.10 at 11:45 PM » EMU-”ﬁhahx 8. Babylon high-rise constnmﬁon Babylon is a construction oompany specializing in high-rise buildings. Babylon‘s average cost (AC) curve is given by
the equaiion A6 = 5000'5 where G E the numberof high rim being built thatyear, and AC is the cost per building
in millions of dollars. Babyion discovers that, for every 1!] high rises built, its average cost decreases by $5 million. a. This cost funcbon a learning curve effect. This cost function has
economies ofscale. Ly I b. For its ﬁrst yearof production, Babylon plans to build four buildings. The average cost per building is $100 milion. :J For its ﬁlth year of production, after completing 20 high-rises in past years, Babylon
again plans to build four buildings that yeah The average cost per building is $90 million. a. :‘(Jesmns i'oDl 1.23 nauyngh: :5. gum-2am; Aplia tnc. an “gm: reserved. O lnttmel [Prmcclcd Mode On amuse. - ...
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