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Unformatted text preview: 3. The table below gives the production function for Betty’s Hot Air Balloon Rides. 3 Labor Output (rides per day) (workers per day) Plant 1 Plant 2 Plant 3 Plant 4 1 4 10 13 15 2 10 15 18 21 3 13 18 22 24 4 15 20 24 26 5 16 21 25 27 # of Balloons 1 2 3 4 Betty pays $500 a day for each balloon she rents and $250 a day for each balloon operator she hires. a) Find and graph the average total cost curves for each plant size. Put these in one graph and label each one. b) Draw Betty’s longrun average cost curve in the above graph and label it LRAC. Then indicate the minimum efficient scale of operations with Q* in your graph. c) Briefly explain how Betty uses her longrun average cost information to determine how many balloons to rent....
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This document was uploaded on 02/26/2011.
 Fall '09

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