Wolfsburg Wagon (WW) is a small automaker. The accompanying table shows WW’s long run average total cost.
|
Quantity of cars |
LRATC of car |
|
1 2 |
$30,000 20,000 |
|
3 |
15,000 |
|
4 |
12,000 |
|
5 |
12,000 |
|
6 |
12,000 |
|
7 |
14,000 |
|
8 |
18,000 |
a. For which levels of output does WW experience increasing returns to scale?
b. For which levels of output does WW experience decreasing returns to scale?
c. For which levels of output does WW experience constant returns to scale?