Hi, I am new to Economics and would greatly appreciate a good response to the following question which I find quite difficult to answer entirely on my own. (it's so longish :confused: )


Part B (7 ½ marks) (1000 words)

Choose an example of a good or service that is traded in a market.

1. (1 mark) Describe the production function for the good or service: What is the output? What are the inputs? What is the production process by which inputs are converted into output?

3. (2 marks) What do you think would be the properties of the cost of production? What are the relative importance of fixed and variable costs? What will happen to marginal costs as the quantity of output increases? How will average total cost vary with the quantity of output?

4. (2 marks) What would be an example of a make-or-buy decision for a firm producing this good or service? What would be the main advantages and disadvantages of buying rather than making?

5. (2 ½ marks) (I) Describe the type of market in which the good or service is traded: Who are the main buyers and suppliers? How does trade occur? How are prices determined? Is there any effect of government regulation on market outcomes?; and (ii) Would a firm in this market have market power? Why?

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