Calculate minimum efficient scale for a firm with the following cost and demand curves: Q(P)= 343-7P...

Calculate minimum efficient scale for a firm with the following cost and demand curves:

Q(P)= 343-7P

C(Q)= 311040+.0005Q⁴

Solutions

Expert Solution

Q(P) = 343 - 7P

P = 49 - Q/7

The marginal cost is given by:

dC/ dQ = 0.002 Q³

At minimum efficient scale, the price is equal to the marginal cost.

49 - Q/7 = 0.002 Q³

0.014 Q³ + Q - 49 = 0

Q = 11.56

The minimum efficient scale is at Q = 11.56.

Rahul Sunny answered 2 years ago

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