Question

Suppose that the production of a good exhibits external economies of scale. In particular, suppose that...

Suppose that the production of a good exhibits external economies of scale. In particular, suppose that the total cost of producing a quantity Q of the good is given by C(Q) = [100/(Q + 2)]Q +2Q.

a.Suppose that another country joins the world market for this good. There, the total cost is given by C*(Q*) = [50/(Q*+2)]Q* + 2Q*. What is the average cost when the quantity produced is 8?

b. Suppose that in this country, the demand for this good is given by QD = (25/6) - (1/6)P. What is the equilibrium price in this country given that it does not trade?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that the production of a good exhibits external economies of scale. In particular, suppose that...
Suppose that the production of a good exhibits external economies of scale. In particular, suppose that the total cost of producing a quantity Q of the good is given by C(Q) = [100/(Q + 2)]Q +2Q. a. Suppose that for the whole world, the demand for this good is given by QD = 50 - (1/2)P and all the production of the good is concentrated in the country in question. What is the world equilibrium output? b. What is the...
This question deals with external economies of scale. a) (5 marks) How does external economies of...
This question deals with external economies of scale. a) How does external economies of scale potentially justify infant industry protection? Use a diagram to help you answer this. b) Suppose that Germany and India can both produce shirts, but India has a lower average cost curve. Germany has the head start in world production of shirts, beginning as the world’s only supplier of shirts. Even though Germany has the head start advantage, India can still enter production of shirts. Draw...
Suppose there exists external economies of scale in an industry located in country X. If country...
Suppose there exists external economies of scale in an industry located in country X. If country X moves from free trade to autarky, it necessarily loses welfare. Explain in detail, using any relevant diagrams, whether the above statement is true, false or uncertain.
Which of the following cost functions exhibits economies of scale? (a) C(q) = q(10 + q2)...
Which of the following cost functions exhibits economies of scale? (a) C(q) = q(10 + q2) (b) C(q) = q3 + 30 (c) C(q) = q2 + 10 (d) None of the above
1. When a technology exhibits internal economies of scale, average cost falls for the industry when...
1. When a technology exhibits internal economies of scale, average cost falls for the industry when firm's output increases. average cost falls for each firm when industry output increases firm's average cost falls when the firm's output increases. firm's marginal cost falls when the firm's output increases. 2. When a technology exhibits external economies of scale average cost falls for the industry when firms's output increases. average cost falls for each firm when industry output increases. firm's average cost falls...
Question 2 Consider an economy that is closed and produces a good (Q 1 ). The...
Question 2 Consider an economy that is closed and produces a good (Q 1 ). The domestic supply and demand for the good is given below: Supply: Q 1 = -50 + 5P Demand: Q 1 = 400 – 10P a. Find the equilibrium price and quantity in the market and illustrate graphically. b. Suppose the world price in the market is $15 per unit and the country opens up to trade. Calculate the quantity of imports or exports in...
Suppose the production function for widgets is given by: q = kl – 0.8k2 – 0.2l2,...
Suppose the production function for widgets is given by: q = kl – 0.8k2 – 0.2l2, where q represents the annual quantity of widgets produced, k represents annual capital input, and l represents annual labor input. Which of the following statements is correct? a. The widget production function exhibits constant returns to scale. b. The widget production function exhibits increasing returns to scale. c. The widget production function exhibits decreasing returns to scale. d. The widget production function is homogeneous...
A company produces two goods, X and Y. Production technology exhibits the following costs, where C...
A company produces two goods, X and Y. Production technology exhibits the following costs, where C (Qx, Qy) represents the cost of producing Qx units of good X and Qy units of good Y: C (0.50) = 100, C (5,0) = 150, C (0,100) = 210, C (10,0) = 320, C (5,50) = 240, and C (10,100) = 500. Respond and justify your answers to the next questions: Does this technology exhibit economies of scale? Does this technology exhibit economies...
Suppose that domestic demand in the market for good X is given by the equation Qd...
Suppose that domestic demand in the market for good X is given by the equation Qd = 60 - P. And that domestic supply in the market for good X is given by the equation Qs = 2P Suppose the world price is $10 and the country allows free trade. What is consumer surplus with free trade? Suppose the government imposes a $5 tariff on imports. What is the gain to suppliers from this tariff? What is the gain to...
Explain your answer in detail. Suppose that two countries, A and B, employ the same technology...
Explain your answer in detail. Suppose that two countries, A and B, employ the same technology in the production of a good. External economies of scale apply in both countries. Analyze the effects of trade on long-run production levels if country A has a comparatively lower cost of production when trade begins.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT