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6 afirm that sells a perishable product inurseverage production cost...

Question: 6 afirm that sells a perishable product inurseverage production cost...

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6. Afirm that sells a perishable product inurseverage production cost Prag)-10%-1(which falls as output increases), and average transportation cost Taq) = 10+2g (which rises as output naeases). Sketch these costs functions on the same graph. Be as precise mathematically as possible. a) b) Find total cost by adding production and transportation costs. Find the average total cost expression. Can you determine the optimal plant size (MES) using the information given? Illustrate your answer. What are the values of average production and transportation costs at the optimal (cost-minimizing) production level? c) d) What changes in costs do you think will lead to a reduction in the scale of operations?

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