Question

4. (a) A micro-entrepreneur produces caps and hats for women. The output-cost data of the business is reproduced below: Output Total Cost 50 870 100 920 150 990 200 1240 250 1440 300 1940 350 2330 Using the above data estimate total cost equation and determine the average and marginal cost functions. Determine the output rate that will minimize average cost and the per-unit cost at that rate of output. The current market price of caps and hats per unit is Tk. 6.00 and is expected to remain at that level for the foreseeable future. Should the firm continue its production? (b) Using the following cost data how would you estimate your short run supply curve. If there are 100 firms in the industry, would be the industry supply? [Hint. Think about the relationship between MC and AVC and find the output supply of a single a firm) MC FC VC ATC AVC OUTPUT 0 1 TC 100 125 145 157 177 2 3 4 5 6 7 202 236 270 8 9 10 326 398 490

Answer 1

Answeden Summarized the information and data given in the question, A micro-entrepreneur @'Yes," the fiom should continue its busines. TTC с LATC Avc mo output. fc - 25 125 9 270 100 170 100 1226 100298 100 100 100 25 125 25 २ 100 | 45 145 72.5 22.5 20 3 100 57 157 52:3 19 12 10077 127 444:25 19.25 5 100 102 202 33.66 20.4 25 6 100 136 236 39.33 22.66 34 7 38.571 24.28 56 326 10.75 28.25 92. 9 398 4422 33:11 92 100 3901 490 ya 39 * when mc is above Ave, it is pushing the average up to so Ave must be raising. when the matginal unit costs more than the average, the average has to increase. The mc cuove intersects the Avc curve at the minimum point on the Avc- clove. y at the intersection mc & AVC are equal. Please please kindly Up-vote. 10