Question
1) Consider the long-run production of Bicycles. The cost of the indivisible inputs used in the production of bicycles is $6000 per day. To produce
1)Consider the long-run production of Bicycles. The cost of the indivisible inputs used in the production of bicycles is $6000 per day. To produce one Bicycle per day, the firm must also spend a total of $80 on other inputs-labor, materials, and other capital. For each additional bicycle, the firm incurs the same additional cost of $80.
a)Compute the average cost for 30 bicycles, 60 bicycles, 100 bicycles, and 300 bicycles.
Draw the long-run average cost curve for 30,60,100 and 300 bicycles per day.
1)Draw a graph of perfectly competitive market and explain equilibrium of the firm by choosing output level at which
a.P=MC=MR and Firm is making zero economic profit.
b.P=MC=MR and Firm is making a loss.
c.Explain shut down rule with the help of graph.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started