Suppose the Inputs and Outputs for Carbon Credits Are Shown

question 45

Essay

Suppose the inputs and outputs for Carbon Credits are shown below. $$\begin{array} { c c c c c } \hline { \quad\quad\quad\quad\quad\text { Inputs } } \\\hline \text { Output } & \text { Capital } & \text { Labour } & \text { Total Cost } & \text { LRAC } \\100 & 1 & 4 & & \\200 & 2 & 7 & \\300 & 3 & 10 & & \\400 & 4 & 14 & & \\500 & 5 & 19 & \\600 & 6 & 25 & & \\\hline\end{array}$$ a) If capital cost $40 per unit and labour costs $12 per unit fill in the blanks in the table above.
b) At what output do increasing returns come to an end?
c) What is the shape of the LRAC curve?
d) Graphically, what would happen to the LRAC curve if the cost of capital dropped to $30 per unit?

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Definitions:

Continuous Probability Distribution

A type of probability distribution where the possible outcomes are any values within certain ranges or intervals.

Discrete Probability Distribution

Represents the probabilities of outcomes of a discrete random variable, where the variable can take on only a countable number of distinct values.

Standard Normal Probability Distribution

A normal distribution with a mean of 0 and a standard deviation of 1, used in statistical analysis to represent standardized values of a dataset.

Probability Density Function

A function that describes the likelihood of a random variable to take on a particular value.