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Questions › DSE › DSE 2015 › Q60
2 marks, −0.666666666666667Microeconomics › Costs of production › Cost minimisation and long-run input choiceModerateabout 3 min

DSE 2015 Question 60: Costs of production

A profit-maximizing firm owns two plants with cost functions c1(q)=q22c_1(q)=\tfrac{q^2}{2}c1​(q)=2q2​ and c2(q)=q2c_2(q)=q^2c2​(q)=q2, and may use either or both to produce any output. For this firm, the marginal cost curve

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Answer and worked solution

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Plain-text version

A profit-maximizing firm owns two plants with cost functions c₁(q)=q²/2 and c₂(q)=q², and may use either or both to produce any output. For this firm, the marginal cost curve (A) lies above the 45^∘ line through the origin, for all positive outputs (B) lies below the 45^∘ line through the origin, for all positive outputs (C) is the 45^∘ line through the origin (D) none of the above

Also written as: A profit-maximizing firm owns two plants with cost functions c_1(q)=q^2/2 and c_2(q)=q^2, and may use either or both to produce any output. For this firm, the marginal cost curve

Costs of production has come up 83 times in 7 exams since 2006.

What this question tests

This question is on Cost minimisation and long-run input choice, part of Costs of production in Microeconomics.

Choosing inputs to produce a given output at least cost, including across several plants.

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Question from the DSE 2015 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.