Question
suppose one can produce material into goods. cost of producing q goods is given by TC = q 2 . The demand for material is
suppose one can produce material into goods.
cost of producing q goods is given by TC = q2.
The demand for material is P = 100 - q.
(a) If you were him, how many good will you produce and how much would you charge for each good?
(b) Suppose in addition to producing those good himself, one can also obtain good from an outside supplier at $60 per good. This outside supplier cannot sell good directly to the market; supplier can only supply good to him who then can sell them to the market. How many swords does him sell now? how many swords does him produce himself and how many are obtained from the outside supplier?
(c) suppose now the good becomes very popular, and the demand increases to P = 200 - q. The cost function remains the same. And also in addition to producing good himself, he can obtain good from the same outside supplier at $60 per. This outside supplier cannot sell good directly to the market; supplier can only supply swords to him who then can sell them to the market. How many swords does he sell now? how many good does him produce himself and how many are obtained from the outside supplier?
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