Find the total cost of producing q units of honey for

Reference no: EM13392307

Suppose honey is produced in a beehive using bees and sugar. Each honey producer uses one beehive which she rents for $1/month. Producing q gallons of honey requires spending q dollars on bees, and q2 dollars on sugar.

a) What is the total cost of producing q units of honey for an individual honey producer?

b) What is the average cost of producing q units of honey per month for an individual producer?

c) In general, if the total cost of producing honey is a + bq + cq2, then the marginal cost of producing honey is b + 2cq. Assuming each honey producer operates as a price-taker, what is the supply curve for an individual producer?

d) Let Q be the total market supply, and q is the supply of an individual firm. Therefore, q = Q/n where n is the total number of firms in the market. Determine an expression for the market supply curve.

e) Suppose the demand for honey is given by Q = 45-P. Also, suppose there are 20 honey producers in the market. What is the equilibrium price of honey?

f) How much profit does an individual producer make? Is this a long run equilibrium?

Reference no: EM13392307

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