Reference no: EM133080488
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?