Homework: Microeconomics
I. Consider the long-run production of Bicycles. The cost of the indivisible inputs used in the production of bicycles is $6000 per day. To produce one Bicycle per day, the firm must also spend a total of $80 on other inputs-labor, materials, and other capital. For each additional bicycle, the firm incurs the same additional cost of $80.
i. Compute the average cost for 30 bicycles, 60 bicycles, 100 bicycles, and 300 bicycles.
ii. Draw the long-run average cost curve for 30,60,100 and 300 bicycles per day.
II. Draw a graph of perfectly competitive market and explain equilibrium of the firm by choosing output level at which
i. P=MC=MR and Firm is making zero economic profit.
ii. P=MC=MR and Firm is making a loss.
iii. Explain shut down rule with the help of graph.
Format your homework according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.