Asked by Emily Esparza on Jul 08, 2024
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On a tropical island there are 100 potential boat builders, numbered 1 through 100.Each can build up to20 boats a year, but anyone who goes into the boatbuilding business has to pay a fixed cost of $19.Marginal costs differ from person to person.Where y denotes the number of boats built per year, boat builder 1 has a total cost function c(y) 19 y.Boat builder 2 has a total cost function c(y) 19 2y, and more generally, for each i, from 1 to 100, boat builder i has a cost function c(y) 19 iy.If the price of boats is 25,how many boats will be built per year?
A) 480
B) 120
C) 60
D) 720
E) Any number between 500 and 520 is possible.
Marginal Costs
The increase in cost due to the production of one further unit of a product or service.
Total Cost Function
An equation that shows the overall cost incurred by a firm in the production process, including both fixed and variable costs, as a function of the quantity of output produced.
Fixed Cost
Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.
- Become familiar with the role of cost structures and production functions in shaping the supply from firms and industries in competitive environments.
- Assess the movement within competitive markets, highlighting the incorporation and dissolution of businesses.
Verified Answer
Learning Objectives
- Become familiar with the role of cost structures and production functions in shaping the supply from firms and industries in competitive environments.
- Assess the movement within competitive markets, highlighting the incorporation and dissolution of businesses.
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