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The short run total cost of a firm is given by: SRTC en e +4q+ 432K where k is fixed
The short run total cost of a firm is given by: SRTC en e +4q+ 432K where k is fixed. Suppose that the firm wants to produce q=36. The economically efficient level of Kis:
Expert Solution
The economically efficient level of K is 3
By substituting the different value of k, ATC can be found as below to get minimum ATC which represents the most efficient level of output and the value of k is 3.
|
k |
q |
SRTC |
ATC = SRTC/q |
|
1 |
36 |
4464.00 |
124.00 |
|
2 |
36 |
2952.00 |
82.00 |
|
3 |
36 |
2736.00 |
76.00 |
|
4 |
36 |
2844.00 |
79.00 |
|
5 |
36 |
3081.60 |
85.60 |
|
6 |
36 |
3384.00 |
94.00 |
|
7 |
36 |
3723.43 |
103.43 |
|
8 |
36 |
4086.00 |
113.50 |
|
9 |
36 |
4464.00 |
124.00 |
|
10 |
36 |
4852.80 |
134.80 |
|
11 |
36 |
5249.45 |
145.82 |
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