ECO200Y5 Study Guide - Final Guide: Economic Surplus, Decorative Box, Necktie
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Tutorial 9 - monday - july 7, 2014 - 4pm - 5pm. Suppose there are 1,000 identical firms producing diamonds and that the short- run total cost curve for each firm is given by and short-run marginal cost is given by. How many more diamonds would be produced at a price of. 21? (b) suppose that the wages of diamond cutters depend on the total quantity of diamonds produced and the form of this relationship is given by w = . 002q where q represents total industry output, which is 1,000 times the output of the typical firm. In this situation, show that the firm"s marginal cost (and short-run supply) curve depends on q. A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that the long- run average cost is minimized at an output of 20 units (qi = 20). The minimum average cost is per unit.