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# Peter s Pipers produces plumbing pipe The long-run total cost of Peter s pipes is L TC 20000Q 200 Q2 Q3 where Q is measured as thousands of feet of The long-run marginal cost of Peter

Peter s Pipers produces plumbing pipe. The long-run total cost of Peter s pipes is L TC = 20,000Q - 200 Q2 +Q3, where Q is measured as thousands of feet of piping. The long-run marginal cost of Peter s pipes is given as LMC = 20,000 - 400Q + 3 Q2. a. Divide total cost by Q to obtain Peter s long-run average cost of producing pipe. b. Exploit the relationship between LMC and LAC to find the quantity where LAC is at a minimum. c. What is the lowest possible average cost at which Peter can produce pipe? d. Over what range of output does Peter s Pipers experience economies of scale? Over what range of output does Peter s Pipers experience diseconomies of scale?

Apr 03 2020 View more View Less Subscribe To Get Solution