Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question: Use the information given above to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not? Isprofit curves valuing at $ 34,000 and $ 60,000 on both firms.
Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question: Use the information given above to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not? Isprofit curves valuing at $ 34,000 and $ 60,000 on both firms.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms:
- Firm A: TC = 2Q -----------------------------(1)
- Firm B TC = 10 + 2Q -------------------------(2)
Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000.
Question: Use the information given above to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not? Isprofit curves valuing at $ 34,000 and $ 60,000 on both firms.
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