Minimum efficient scale for each technology

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Reference no: EM1320834

Q. An industry can select between 2 production technologies for a new product line. If it installs technology 1, its yearly costs will be C1(q) = 3600 + 65q + 36q2. If it installs technology 2, they will be C2(q) = 900 + 900q + q2.

a. Illustrate what is the minimum efficient scale for each technology?

b. Which would the industry prefer (purely from a cost standpoint) if it expected to sell 30 units in summer also 10 units in winter each year?

c. Illustrate what if it was more optimistic about summer sales?

Reference no: EM1320834

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