Question

You work for a company that is being accused of monopoly behavior, given its large size. Comparisons are made to the industry standard, where each establishment has on average about 16.2 employees. Your company is bigger than that, but you want to provide evidence against the monopoly charges.

You’ve collected data at different times in your company’s history, when you had different amounts of capital.

In 2003, SRATC = 7Q2 – 50Q + 200

In 2008, SRATC = 3Q2 – 75Q + 600

In 2014, SRATC = 4.5Q2 – 72Q + 335

After plotting these three different SRATC curves (have Q go from 0 to 20), what do you notice about how your company's size and costs have changed as time has gone on?

Select one:

a. The firm contracted in size as time went on, but had increased costs as well.

b. At the beginning of the period, the firm was smallest but enjoyed the lowest costs. By the end of the period, the firm had expanded to its largest size and also had its highest costs.

c. In 2003, the firm was relatively small with high costs. In 2008, the firm grew quite a bit, but costs were even higher than in 2003. In 2014, the firm settled into a medium size and had the lowest costs of any of the years.

d. The firm was smallest in 2003 and had medium costs; was largest in 2008 and had the lowest costs; and was a medium size but had the highest costs in 2014.

Answer 1

if, we put Q=1

In 2003, SRATC = 7-50+200 = 157

In 2008, SRATC = 3-75+ 600 = 528

In 2014, SRATC = 4.5-72 +335 = 267.5

we can observe that , the cost has been increased to 2008 in compare to 2003. The firm has also grown up in size as it is already told that the firm is accused of monopoly behavior, given its large size

So, we can conclude that,

b. At the beginning of the period, the firm was smallest but enjoyed the lowest costs. By the end of the period, the firm had expanded to its largest size and also had its highest costs.