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Two suppliers have been contracted by a government agency to provide a total of 100 hours of training services to help agency employees learn how to use a new computer system. The marginal cost curve of firm 1 is MC1=100+.2Q1, while the marginal cost curve for Firm 2 is MC2=90+.4Q2. There are no fixed costs. Each firm provides 50 hours of training services each week.
a. What is the total cost to firm 1 of providing 50 hours of training?
b. What is the total cost to firm 2 of providing 50 hours of training?
c. What is the marginal cost of training for firm 1 at 50 hours of training?
d. What is the marginal cost of training for firm 2 at 50 hours of training?
e. Is this the least costly division of training services between the two firms? If not, which firm should produce more, and which should produce less?
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