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. Q : Use the information given above to identify any differences in the shape of the two firms’ isoprofit curves valuing $ 34,000 and $ 60,000. Provide an explanation for differences that may exist?
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. Q : Use the information given above to identify any differences in the shape of the two firms’ isoprofit curves valuing $ 34,000 and $ 60,000. Provide an explanation for differences that may exist?
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.
Q : Use the information given above to identify any differences in the shape of the two firms’ isoprofit
Provide an explanation for differences that may exist?
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