Q1A: (1) From the firm's perspective, outline the key difference between the short-run and the long-run. [2 marks] (Your

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Q1a 1 From The Firm S Perspective Outline The Key Difference Between The Short Run And The Long Run 2 Marks Your 1 (55.2 KiB) Viewed 56 times

Q1A: (1) From the firm's perspective, outline the key difference between the short-run and the long-run. [2 marks] (Your word limit for answering this question: 25 words) (ii) Consider the case of Bob's Bakery. Bob's uses two inputs to make loaves of bread: labour (bakers) and capital (ovens). Suppose the firm's rental payments on ovens add up to $40 a day. It can produce between 100 and 300 loaves per day in batches of 50. Suppose that if the fimm produces 100 loaves in a day, its labour cost (wages for bakers) is $500. Suppose that when the firm produces an extra 50 loaves a day, its labour cost rises by $200. Summarise this information in a table with the following column headings: Total Costs Fixed Costs Variable Costs Loaves (per day) [5 marks) (iii) Extend your table by 4 columns to include the average total cost, average fixed cost, average variable cost, and marginal cost for each output level. [3 marks] (iv) Suppose that Bob's marginal revenue is $4. How much should the bakery produce to maximise profit? [2 marks] (Your word limit for answering this question: 15 words)