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  3. 4 consider two firms with identical fixed costs but different...

Question: 4 consider two firms with identical fixed costs but different...

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4. Consider two firms with identical fixed costs, but different variable costs (for example, one firm has access to cheaper inputs or is located closer to the point of sale than the other): c. (g) = 625+q and MC,-1 and G (9)-625 + 492 and MC,-89 Find average total, average fixed and average variable cost functions for the two firms a) b) Find the minimum efficient scale of each firm average cost at MES (Hint: Use MC ATC rule). Which firm will be able to achieve lower average cost point?
c) Sketch MC and ATC for the two firms on the same graph. d) Looking at the MES of the two firms, if the industry were populated by firms of only one type, can you guess which firms type, 1 or 2, will lead to a more competitive industry?
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