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The Mini-Case Economies of Scale at Google describes economies of scale for Google Cloud Storage. The cost function for this service is well approximated by C F + cq, where C is total cost, F is fixed cost, c is a constant, and q is output. What is marginal cost for this cost function? What is aver age cost? Over what range of output does Google have economies of scale?
Mini-Case Economies of Scale at Google Google has become a leader in data storage, offering access to what it calls Google Cloud Storage. People access their data from Googles massive data stor- age devices using the Internet, as though from a cloud in the sky. By operating at a gigantic size and using a new approach, Google is able to lower its average cost and achieve economies of scale. In the past, a firm would buy as many large hard disk units as it needed. Once the firm was buying the largest possible unit, to get more storage it would just buy more such hard disk units and its costs would rise in proportion to the number of units it needed. Rather than buying off-the-shelf completed hard-disk units, Google buys raw computer parts in massive quantities, and assembles custom units on open racks without unnecessary components such as individual cases and fans. Google automatically backs up data on multiple hard disks. Thus, when a disk fails, a worker quickly yanks it out and replaces it with a new unit without spending time on a tedious manual backup. By sharing cooling and labor costs over many units, it lowers its average cost of storing data These lower costs that derive from greater economies of scale have allowesd Google, Amazon, and a few other firms to create a new, disruptive industry These firms provide disk storage with excellent backup in the cloud to indi- viduals and firms who no longer have to buy relatively expensive, smaller hard drives and rely on themselves to backup their data.
Please show all work in excel
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