Suppose That,in the Long Run,a Dairy's Variable Costs Are VC

question 52

Multiple Choice

Suppose that,in the long run,a dairy's variable costs are VC = 2Q² (where Q is the number of gallons of milk produced each day) ,its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day.In the long run there is free entry into the market.What is the efficient scale of production?

• A) 5 gallons per day
• B) 100 gallons per day
• C) 20 gallons per day
• D) 50 gallons per day

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Definitions:

Hours

A period of time equal to a twenty-fourth part of a day and night and universally understood to be 60 minutes.

Dimensional-analysis

A mathematical technique used to convert units of measurement without changing the dimensional or physical value.

Kilometers

A unit of length in the metric system equal to 1,000 meters, often used to measure distances.

Miles

Units of distance measuring 5,280 feet, or approximately 1.609 kilometers, commonly used in the United States.