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Unformatted text preview: Q3 No, AVC can be either increasing or decreasing. Q4 No, if the capital/labour ratio changes as output is increased. Q5 a. C(q) = 5000 + 500q AC(q) = 5000/q + 500 b. Very large. Q6 a. C(q) = 50000 + 2200q AC(q) = 50000/q + 2200 MC(q) = 2200 AC will decrease as q increases. b. L = 40 AC(q=1000) = 2250 c. K/L = 1/2 (i.e., K = L/2 or L = 2K) d. L = 20 K = 10 AC(q=1000) = 2200 e. C(q) = 6,324.56q 1/2 + 2000q...
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This note was uploaded on 01/22/2012 for the course COMM 220 taught by Professor J.garon during the Spring '08 term at Concordia Canada.
- Spring '08