Chapter 22 - Assignment 3: Economies of Scale on Dairy Farms

1. Use Table 1 to compute an average fixed cost schedule.
2. Use Table 1 to compute a marginal cost schedule.
3. List the major reasons for the existence of economies of scale in dairy farms.
4. How has the development of automated milking equipment affected the shape of the long-run average cost curve? Is it likely that this innovation has raised the minimum efficient scale in this industry? Explain.