A. Firm 1 should produce 50 beams and firm two should produce 50 beams B. Both f

Question

A. Firm 1 should produce 50 beams and firm two should produce 50 beams B. Both firms should produce some output, but firm 2 should produce more than firm 1 C. Firm 1 should produce all of the output D. Firm 2 should produce all of the output
2. The figure below shows the production costs of two firms that produce steel beams. If these two firms represent total production in the industry, how should they allocate the production of 300 beams to minimize costs? A. Firm 1 should produce 150 beams and firm 2 should produce 150 beams B. Firm 1 should produce 100 beams and firm 2 should produce 200 beams C. Firm 1 should produce all of the beams D. Firm 2 should produce all of the beams
3. The table below provides information on three firms in a competitive industry where the market price is $39. Therefore, at these production levels:
A. The marginal cost curves for all three firms are identical B. Firm 1's marginal cost exceeds firm 3'a marginal cost C. Firm 2's marginal cost is $39 D. The total cost of production is maximized by all three firms
4. In a perfectly competitive market, each firm produces: A. A potentially different quantity B. As much quantity as possible C. As little quantity as possible D. The same quantity

Figure: Marginal Costs 1 Firm 2 Firm 1 MC $50. MC $30.. 30 10 10 100 200 100 200 Ref 12-2

Explanation / Answer

1. The figure below shows the production costs of two firms that produce steel beam. If these two firms represent total production in the industry, how should they allocate the production of 100 beams to minimize costs-

Ans- D. Firm 2 should produce all of the output.

Explanation-Here we can see that,the objective is to minimise cost.So when firm B is producing that the cost is $20 and when firm 1 is producing 100 quantity the cost is $30.

2. The figure below shows the production costs of two firms that produce steel beams. If these two firms represent total production in the industry, how should they allocate the production of 300 beams to minimize costs-

Ans-D. Firm 2 should produce all of the beams.

Explanation-When firm 1 produces 100 quantity cost is $30.When firm 2 produces 200 quantity then cost is $30.Total cost is=$60.But when firm 2 produces all then cost will be less than $ 60-as here objective is given that to minimise cost.

3. The table below provides information on three firms in a competitive industry where the market price is $39. Therefore, at these production levels:-

Ans- A. The marginal cost curves for all three firms are identical.

Explanation-As we know the equilibrium condition of perfect competition is,P=MC.So all firms have to fulfilled that codition so,MC=P=39

4. In a perfectly competitive market, each firm produces:

Ans-D. The same quantity .

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