Suppose a Firm's Total Cost Curve Can Be Written $T C ( Q ) = Q - .5 Q ^ { 2 } + Q ^ { 3 }$

question 8

Multiple Choice

Suppose a firm's total cost curve can be written $T C ( Q ) = Q - .5 Q ^ { 2 } + Q ^ { 3 }$ , with marginal cost $M C ( Q ) = 1 - Q + 3 Q ^ { 2 }$ . This cost function exhibits:

• A) economies of scale
• B) diseconomies of scale
• C) neither diseconomies nor economies of scale.
• D) economies of scale for output levels less than some level, \(Q _ { 1 } = 1 / 4\), and diseconomies of scale thereafter.

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