Reference no: EM131211678
In a perfectly competitive market, a firm's average revenue and cost functions are given as follows:
AR = α Q - β where α, β are constants and Q is the output
AC = α - β AR is the average revenue and AC is the average cost.
Q
On the basis of the functions given above, determine:
(i) Total revenue function.
(ii) Total cost function.
(iii) Total break-even output level.
(b) With the help of a well-illustrated diagram, explain how the long-run equilibrium of a perfect competitive model is achieved in an industry.
(c) Using an appropriate diagram, illustrate the profit maximizing output for a monopolistic firm.
(d) Explain three advantages of economies of scale to the firm.
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