A firm can choose between two 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 b
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A firm can choose between two 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
.
i) What is the minimum efficient scale for each technology?
ii) Which technology would the firm prefer (purely from a cost
standpoint) if it expected to sell 30 units in summer and 10 units in
winter each year?
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