Consider a firm that produces ships and submarines. This firm's production transformation curves for two different input levels are illustrated in the figure to the right. In particular, the firm is using twice as many inputs at O₂ compared to 0₁. This firm experiences Furthermore, the firm experiences scale in the production of ships and scale in the production of submarines. Number of submarines 100- 90- 80- 70- 60- 50- 40- 30- 20 10- 10 20 0₁ 30 40 50 60 70 Number of ships 80 90

Consider a firm that produces ships and submarines. This firm's production transformation curves for two different input levels are illustrated in the figure to the right. In particular, the firm is using twice as many inputs at O₂ compared to 0₁. This firm experiences Furthermore, the firm experiences scale in the production of ships and scale in the production of submarines. Number of submarines 100- 90- 80- 70- 60- 50- 40- 30- 20 10- 10 20 0₁ 30 40 50 60 70 Number of ships 80 90

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.8P

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