This question deals with cost curves Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC →Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs 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 --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost per unit in each firm is $2. Firm B has a fixed cost of $10. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2).

This question deals with cost curves Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC →Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs 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 --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost per unit in each firm is $2. Firm B has a fixed cost of $10. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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