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Explain the essence of the economies of scale

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A firm sells its product in a competitive market where all firms charge a price of Rp 40,000 per unit. The firm's total costs are given as below: C(Q) = 2,805 + 122 Q + Q2

a. How much output should the firm produce in order to maximize profit?

b. What is the difference between production (and cost) in the short-run and the long-run?

c. In what sense competitive market is an ideal market structure?

Answer the following questions:

a. Explain the essence of the economies of scale and opportunity cost. Give two actual examples of each concept.

b. By using formula below, explain the concept of economies of scope:

TC(Qx, Qy) - TC (0, Qy) < TC(Qx, 0) - TC(0, 0)

c. Show the difference between sunk cost and fixed cost with one concrete example.

A consumer shares her income 950 between the consumption of product X and product Y. The relevant market prices are Px = 12 and Py = 15.

a. Write the equation for the consumer's budget line.What is the MRS between goods X and Y?.

b. Show graphically how the consumer's choice changes when the price of good X increases to 20.

c. What is the essence of the discussion about substitution and income effect?

Reference no: EM133080488

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