Assume that the two firms A and B are in two isolated markets. The total cost functions of both firms are shown below:
Firm A’s total costs = $(150 + 5Q)
Firm B’s total costs = $(100 + 5Q)
where Q is the quantity produced.
Suppose that both firms face the same demand function, that they are both pursuing a profit maximization policy, and that both firms are earning positive economic profits. Compared with firm A, firm B produce __________, and have __________ profits and __________ producer surplus.

Question

Assume that the two firms A and B are in two isolated markets. The total cost functions of both firms are shown below:

Firm A’s total costs = $(150 + 5Q)

Firm B’s total costs = $(100 + 5Q)

where Q is the quantity produced.

Suppose that both firms face the same demand function, that they are both pursuing a profit maximization policy, and that both firms are earning positive economic profits. Compared with firm A, firm B produce __________, and have __________ profits and __________ producer surplus.

Answer

more; higher; larger

Answer

Not enough information to answer this question.

Answer

the same quantity; the same amount of; the same size of

Answer

the same quantity; higher; the same size of

Answer

less; lower; smaller

Crowdly

Assume that the two firms A and B are in two isolated markets. The total cost fu...

Want instant access to all verified answers on moodle.hku.hk?