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For Kellogg's Corn Flakes, we will
assume the average cost is constant, so that the unit cost of a pound of cereal is equal to e2, regardless of the
quantity produced.
1. Draw the cost function (also called the total cost curve) for this case.
2. What do the marginal and average cost functions look like?
3. Now suppose that the marginal cost of producing a pound of Corn Flakes was e2, whatever the quantity,
but there were also some fi xed production costs. Draw the total, marginal, and average cost curves in this
case.
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Answers: 3
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For Kellogg's Corn Flakes, we will
assume the average cost is constant, so that the unit cost of a...
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