## $\beginarrayccccccc\text quantity & 1 & 2 & 3 & 4 & 5 & 6 & 7 \\ \hline \text firm 1 & 60 & 35 & 26.67 & 22.5 & 20 & 18.33 & 17.14 \\ \text firm 2 & 11 & 12 & 13 & 14 & 15 & 16 & 17 \\ \text for sure 3 & 21 & 17 & 16.33 & 16.5 & 17 & 17.66 & 18.4 \\ \hline\endarray$Note the as range increases, average cost decreases because that firm $1,$ increases for for sure 2 and is U shaped for firm $3 .$ Thus, over there are raising returns to scale for certain 1 and also decreasing returns to range for firm $2 .$ certain 3 has actually neither enhancing returns nor decreasing returns to scale.

You are watching: Consider the following table of long-run total costs for three different firms:

subject

The economics of job Markets

Firm Behavior and also the organization of Industry

How markets Work

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### Video Transcript

Okay. In this question, we need to observe even if it is these three firms are economic climates of range or face economies of scale. So in order come observe the we need to use average complete cost. Yet when we have actually here is total cost. For this reason we have to calculate that part by ourselves. Okay, so once the quantity is one, the number here are all simply average total cost. For this reason So all right. They're rich. Full cost in color blue. So this numbers are all correct. And also then in quantity, as soon as the amount is too, we need to divide this numbers by two. So, um, think of writing down here. For this reason thirty five and also then twelves and also then seventeen. Okay. And also then this split by 3 is eighty degraded by green iss twenty 6 with six. Climate after us calculated all these numbers, we will certainly then watch their boosting or decreasing. And it's like largely sixteen. Okay, this divided by four, i m sorry is twenty two suggest Right. Fine, then right here it is. Fourteen learn, sixty 2 divided, but for sixteen point. Bye. Well, business suggest traded. Thiss number separated by 5 is twenty. You're fifteen in seventeen, then this divided by 6 this one hundreds ten. Twenty six. This maintain point three. And this is sixteen. Service seventeen. Wait six. Okay, lastly, one hundred and also twenty. Separated by seven. He's seventeen point one. When? One night. If ns did. Sorry. When? when I defied it. Fire 7 is seventeen and they desire to items seven. This eighteen allude four. Okay, so because we have actually calculated all the numbers we deserve to compare appropriate now, so for firm, eh? We see that it goes indigenous sixty come thirty 5 to twenty six suggest six. So the is favor decrease in increasing their crime step forever. So this is the smallest number here, therefore we can see seeing that for for sure aid. The average total cost is decreasing together they develop more. So they room experiencing economic continous turn off scale approach is best in here since the average complete cost is decreasing. Okay, So far from B, the is eleven, twelve, thirteen, fourteen, fifteen, sixteen, seventeen. So it is raising so far from gift it is enduring this economies of scale. What about from seek? it is prefer going native twenty one come seventeen walk down, goes down and then the males of the number below is this sixteen suggest three, it goes down and it goes up. And also so it is favor a U form thing so much from C. The is experiencing space becomes off range at first. And also then after it reaches the minimum corn, it goes increase again. So it isthe endure in this economic situations of scale. ~ above the ideal branch the this average small Kurt s so far from C, it is suffering both, while far from a day's economic situations of scale and also from beasts, police, economies of scale.