Suppose that you are the manager of a watchmaking firm opera…
Suppose that you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by C = 2000 + 2q2, where q is the level of output and C is total cost. Marginal cost is given by 4q. a. What is the firm’s fixed cost? Average variable cost? Average total cost? (9 points) b. Calculate the cost-output elasticity at this level of production. Does the company at this level indicate economies or diseconomies of scale? (6 points)