Manageriirt Economics Market Structtre

C}I.APTER 7

MARXET STRUCTURE
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a ) Fcrfurx' Cornpeiiiion
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1. Sugrerhealth Exercise Company manufactures bisycles and hces a horizonbl
demarrd curve. The firm'stotal cost function is given by the equation.

TC= 10O0+300e-40f+2et
Where Q is the quantity of birycles produced.
Below what price should the ftrm shut down operations?
Using appropriate cost and revenue curys, illustrate the strut-down potnt of fi"re
firm.
(8 marks)
iEco 550 ofirT 99)

2. A birycle'manufafsrer faces' a horizontal demand curr/e. The firnr's totai

variable costs are given bythe equa[on.

TVC = 150Q - 20Q'+ Qt

,t

Where Q is quantity

C-alculate the level ou@ut Srat minimizes.average variable cost.

1 (2 marks)

b) Below what price should the firm shut down operations?

(a marks)

c) Show this situalion in an appropriate diagram.

(2 rrnrks)
' cr6l: 8 marks)
(ECo 5os oKr 99)