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Question: Bowen is a manufacturer of golf carts in Minneapolis servicing Minnesota and several nearby states.  Over the past several years, a number of other golf cart companies have established operations in Bowen's market area, putting severe pressure on prices. Accordingly, Bowen is contemplating construction of a new production facility capable of producing up to 4000 golf carts/year. Engineering cost estimates for the new production facility indicate that

TC = $4200 + 980Q +.003Q2 and

MC = 980 + .006Q

A) Calculate the minimum efficient scale of production for each manufacturer in this industry.

B) If market demand in Bowen's market area of operations is for 8000 carts/year,and if the market is competitive, how many efficiently sized competitors are likely to emerge.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92583490

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