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  3. 1 60 points company x is in a perfectly competitive...

Question: 1 60 points company x is in a perfectly competitive...

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1. (60 points) Company X is in a perfectly competitive industry and is in long run. That is, X has not picked its scale and fixed equipment yet. X has two scale options: Option I: TFC $7,500,000, TVC(Q) 100+ 10,000 Q, in $ Option ll: TFC $3,000,000, TVC(Q) 120+ 25,000 Q2, in $ a) (10 points) Plot ATC and MC for both options on the same graph with x-axis representing the quantity and y-axis representing MC and ATC. (You can use any software) b) (10 points) Denote the quantity at which ATC and ATCi are equal to each other, Ox. Solve Q c) (15 points) What is the minimum price, denoted by Py, at which you would prefer scale I rather than scale ? d) (15 points) is Py equal to ATG (Qx) ? Why or why not? Note that at Qx, ATC, (Or) = ATCOx

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