Derive the output level and the average total cost

Reference no: EM132192636

Question: Consider an industry where there are 10 low cost firms each with a total cost function of C(q) = 10q + 4q2 + 144 and a potentially infinite number of high cost firms with a total cost function of C(q) = 10q + 4q2 + 324. Assume that these firms compete competitively. All firms operate at the most efficient scale.

i) Derive the output level and the average total cost where average total cost is minimized for each firm type. This is the exit price of each firm type.

ii) Draw the long run supply curve for the industry labeling all kink points, and axes.

iii) Suppose that the industry demand is given by Q(P) = 100 - P. What is the equilibrium price, industry quantity?

iv) How many low cost firms operate and how many high cost firms operate? What are their profits?

Reference no: EM132192636

Questions Cloud

What recommendations do you have for teaching innovation : First, take the side of the debate in which you agree innovation can be taught. What recommendations do you have for teaching innovation.

Write an algorithm for a bubble sort : How many key comparison bubble sort has made in the above given case and how many item assignments you have made in this sort.

What are the key challenges that face e-business : What are the key challenges that face e-business during the strategy formulation process?

Given transportation problem is unbalanced : Based on the given demand and supply, the given transportation problem is unbalanced .

Derive the output level and the average total cost : Derive the output level and the average total cost where average total cost is minimized for each firm type. This is the exit price of each firm type.

The various restrictions possible using drm technology : Write a 4 page paper that compares and contrasts the needs of digital content providers to protect their rights to a fair compensation.

Simple linear regression model : Should the business researcher rely on data for X which is not within the range of X data used to build the simple linear regression model? Why or why not?

Us company transition from us gaap to ifrs : How can an Enterprise Resource Planning (ERP) system help an US company transition from U.S. GAAP to IFRS?

Similarities and differences among generic strategies : Describe the similarities and differences among generic strategies. Provide an example of an organization using a generic strategy.

User Account

All Pages