This question deals with cost curves Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC →Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost per unit in each firm is $2. Firm B has a fixed cost of $10. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2).

This question deals with cost curves Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC →Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost per unit in each firm is $2. Firm B has a fixed cost of $10. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Keep in mind that the formula for a firm's cost function is: TC = FC+ C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q3: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Use the information given about firm A and appropriate diagrams/figures (hint:think isoprofit curves, demand curves) to explain how the equilibrium will change for firm A if it's cost of production falls by $1 Assume demand curves to be linear
This question deals with cost curves and isoprofit curves Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost per unit in each firm is $2. Firm B has a fixed cost of $10. (a) Make relevant plots of equations (1) and (2) (b) Use the plots in (a) and plots of isoprofit curves valuing $34,000 and $60,000 for the two firms to identify any differences in the shape of the two firms' isoprofit curves. Can you provide an explanation for any differences that may exist? (c) Use the information on both firms to assess…
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