# PS9 - Econ 301 Intermediate Microeconomics Prof Marek...

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Econ 301 Intermediate Microeconomics Prof. Marek Weretka Problem set 9 (due Thursday, April 19th, before class) Problem 1 (Cost curves) investment is F = 4 (in billions of dollars). When built, the factory will allow to produce y cars at the (variable) cost given by c ( y ) = 4 y 2 a) Does the technology used in the new factory exhibit increasing, decreasing or constant returns to scale b) Find a total costs (TC) of producing 1, 2 and 4 cars. In the graph ( y;COST ) plot a TC curve, and ( AFC ) for three levels of production y = 1 ; 2 and 4 : Plot a AFC curve in a separate graph. What happens to the AFC when production becomes very large (close to d) Find the values of the average variable cost

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## This note was uploaded on 06/04/2011 for the course ECON 301 taught by Professor Hansen during the Spring '08 term at University of Wisconsin.

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PS9 - Econ 301 Intermediate Microeconomics Prof Marek...

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