Questions:
Question 1
Economies of scale (or increasing returns to scale), dis-economies of scale (or decreasing returns to scale), and constant returns to scale. Comment on how to know whether a firm is operating under which scale and the significance of this? Also, is there a trend that the economies of scale may change with production or time? Finally, as some of you have pointed out, how does this differ from economies of scope? Provide an example?
Questions 2
What are some more benefits or disadvantages of a business that opts to keep variable costs very low?
Question 3
What is the difference between short-run and long-run decisions? Elaborate more on how a firm may choose different criteria in choosing its short-run versus long-run optimal output levels? Why? How does this fit into the derivation of a competitive firm's supply curve?
Question 4
What is a market? How do you define the proper market size (identify potential competitors) for a particular product? Why do we need to define the market for a product before we can decide the market structure for this product? Can you define the relevant market for your company's product and identify its market structure?
Question 5
If the company can choose its own price, then would the price that maximizes total revenue (last week) also maximize the company's profit? Why and why not? If not, how would you find out the profit maximization price and quantity? If the company has to take whatever price determined by the aggregate demand and supply for the industry, how would the company maximize its profits?
Question 6
Looking for examples on a contestable market? How would this affect a firm's pricing strategy or advertising strategy?