2. In order to promote animal welfare, Taiwan’s government has set a minimum standard for free range eggs. If the egg producers provide each hen an indoor space of no less than 8 square meters, they will receive certification that distinguishes their animal-friendly eggs from other battery-cage eggs. Suppose you are an egg producer currently producing battery-cage eggs in Taiwan and decide to start producing free-range eggs next year. In order to provide more space for the hens, you will have to expand your farm.

a. What will be the effect of expanding the farm on your total, average and marginal costs?

b. Does your answer in question (a) give you enough information to decide whether to produce free-range eggs next year?