Micro economics assignment four

Microeconomics assignment four

Question 1 A)

Average total cost (175,000 cattle = 100)

Year

50,000cattle

175,000cattle

425,000cattle

850,000cattle

1,350,000cattle

1992

1.104

100.0

94.3

90.6

88.5

1977

1.082

100.0

95.8

93.1

91.7

1963

1.045

100.0

98.0

98.0

96.7

An economy of scale is evident in the given table mainly because there is a decline in the average cost of with increase in the operations of the company. From the table economy of scale evident in all the years and the shape of average cost curve (LRAC) curve would be of down word sloping across three years.

Question 1B)

The table illustrate an increase in economies of scale during the period of time, for instance, in the year 1963 company operation was at its peak i.e. 1350000 cattle ...