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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