A college professor at LeTall

A college professor at LeTall University, Professor Lai, makes mountains out of molehills.
The following provides the information about Lai’s production and cost.
ˆ Molehills are the only input for producing mountains. It takes 100 molehills to
make 1 mountain.
ˆ The market price of molehills is $20 each.
ˆ A few years ago, Lai acquired an option contract that allows him to buy up to 2000
molehills at $10 each. The contract stipulates that he can buy fewer than 2000
molehills but cannot resell the molehills that are obtained through the contract.
ˆ In order to get governmental permission to produce mountains from molehills, Lai
paid $10000 for molehill-masher license.
Based on the above, answer the following questions.
(a) With the option contract, what is Lai’s marginal cost of producing a mountain if
he produces fewer than or equal to 20 mountains? What is the marginal cost if he
produces more than 20 mountains?
(b) Lai is selling mountains in a perfectly competitive market, in which there is a great
mass of other college professors doing the same. The market price of mountains is
$1600. How many mountains will Lai produce and sell?
(c) The government is considering raising the molehill-masher license fee.
(i) Lai claims that he would have gone out of business if the license had costed
$11000. Is Lai telling the truth? Why?

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more