Bridget's Brewery Long-Run Cost Function Is: C(q) =

question 37

Essay

Bridget's Brewery long-run cost function is: C(q) =
, where q is the number of units produced and A is the years of experience of Bridget's Chief Brewer. If Bridget plans on brewing 200 units per period, how much will costs be reduced initially by hiring a brewer with 16 years of experience versus a brewer with 1 year of experience?

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Definitions:

Average Costs

The total cost of production divided by the quantity of output produced, indicating the cost of producing each unit.

Exhibits

Displays or presentations, often in museums or galleries, that showcase artifacts or works of art for public viewing.

Economies of Scale

Refer to the cost advantages that enterprises obtain due to their scale of operation, typically resulting in the reduction of cost per unit.

Diseconomies of Scale

The phenomenon when a company or business grows so large that the costs per unit increase, leading to inefficiency.