a. Calculate TC and MC for both companies and fill in the
table.
b. Draw, in separate diagrams, the ATC and MC curves for
each firm.
c. Summer Tees is initially producing 30 shirts; Fancy Tees
is initially producing 15 shirts. What is the total industry
production cost?
d. Now suppose that Summer Tees produces 10 fewer shirts.
By how much do its costs fall?
e. Suppose that Fancy Tees produces 10 more shirts. By how
much do its costs rise?
f. If the two firms are to produce 45 shirts in total, what is
the cost-minimizing way to allocate production between
the two firms? (Assume that production must be changed
by increments of five shirts, as shown in the table.)
g. Explain how this question relates to the concept of
productive efficiency.
12. The diagram below shows supply and demand in a perfectly
competitive local market for cubic metres (m^3 ) of garden soil.
rishikesh
(rishikesh)
#1