In the island nation of Autarka, cardboard boxes are manufactured by four rms: Andrew's Industries, Brett's Boxes, Carla's Cardboard, and Delia's Durables. In Autarka, cardboard boxes are sold in bundles of 100. At present, the market price for a bundle of boxes is $30. The technology for manufacturing cardboard boxes is readily available and common to all manufacturers. The cost of plant and machinery for a rm in the box manufacturing business is $7,000,000 per year. The labour, material, and energy cost of producing a bundle of 100 boxes is $20. A market study indicates that demand for cardboard boxes is given by the function, P= 40 - Q/500,000 ; where P represents the price of a bundle of 100 boxes, and Qis the total number of bundles of boxes sold each year. Using the information provided in the scenario, derive a total cost function for a typical cardboard box manufacturer. Use QA to denote the quantity produced by the typical firm.
In the island nation of Autarka, cardboard boxes are manufactured by four rms: Andrew's
Industries, Brett's Boxes, Carla's Cardboard, and Delia's Durables. In Autarka, cardboard boxes are sold in bundles of 100. At present, the market price for a bundle of boxes is $30. The technology for manufacturing cardboard boxes is readily available and common to all manufacturers. The cost of plant and machinery for a rm in the box manufacturing business is $7,000,000 per year. The labour, material, and energy cost of producing a
bundle of 100 boxes is $20. A market study indicates that demand for cardboard boxes is given by the function,
P= 40 - Q/500,000 ;
where P represents the price of a bundle of 100 boxes, and Qis the total number of bundles of boxes sold each year.
Using the information provided in the scenario, derive a total cost function for
a typical cardboard box manufacturer. Use QA to denote the quantity produced by the
typical firm.
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