Answer to Question #94613 in Macroeconomics for Pallavi Sharma

Question #94613
2. Suppose in a region each household produces either 1 pair of shoes or 1 gallon of milk per hour. One mile of round-trip travel takes 12 min. A firm produces shoes. The firm faces CRS in production and charges competitive price.
a. What is the slope of net price curve?
b. The market radius of the firm is 4 miles. What is the firm’s average cost of producing shoes?
1
Expert's answer
2019-09-17T11:59:50-0400

a. The slope of net price curve is 12/60 = 1/5.

b. If the market radius of the firm is 4 miles, then the firm’s average cost of producing shoefs is 1/4.


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