Consider Two Firms a and B

Essay

Consider two firms A and B.Firm A notices that its total costs have declined by 10 percent each time its cumulative output has doubled.Firm B notices that its average cost of production declined by 10 percent after it increased production by 5 percent and hired 50 more workers to work with its existing unused equipments.Explain graphically whether the experiences of these two firms will have similar implications on the long run average cost of production.