Practice exercise

docx

School

Humber College *

*We aren’t endorsed by this school

Course

150

Subject

Economics

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by trombinoolivia

1 Practice exercise: Ch. 8 Q1 Anderson and William run a small pottery firm. They hire one assistant at $12000 per year. They also pay annual rent of $5000 for their shop and spend $20000 per year on the materials. They have their own funds invested in pottery equipment that could earn them $4000 interest per year if alternatively invested. They have been offered $15000 per year to work as a potter for a competitor. They estimate that their entrepreneurial talents are worth $3500 per year. Their total annual revenue from pottery sales is $75000. Calculate the accounting cost, implicit costs, economic costs, accounting profits and economic profits for Anderson and William’s pottery firm. Accounting cost or explicit costs = 37,000 Implicit or imputed costs = 22,500 Economic costs = 59,500 Accounting profits = 38,000 Economic profits = 15500 **Accounting profits = Total revenue - Explicit costs **Economic profits = Total revenue – Economic costs

2 Formulas of Short period costs Total cost {TC} = TFC + TVC Average Fixed Cost {AFC} = Total ¿ Cost ¿ Quantityof output = TFC Q Average Variable Cost {AVC} = TotalVariableCost Quantity of output = TVC Q Average Cost {AC} = TotalCost Quantityof output = TFC + TVC Q OR Average Cost {AC} = TFC Q + TVC Q = AFC +AVC Marginal Cost {MC} = Change ∈ Total Cost Change ∈ output = ΔTC ΔQ Q2 Complete the following cost sheet of a firm. Given TFC = $12 mil. (All costs are in $mil.)

3 Output (Q) TVC TFC TC= TFC+TVC AFC= TFC÷Q AVC= TVC÷Q AC= AFC+AVC MC ∆TC ∆Q 0 0 12 12 ______ _______ _______ ________ 1 6 12 18 12 6 18 6 2 8 12 20 6 4 10 2 3 9 12 21 4 3 7 1 4 10 12 22 3 2.5 Q3 A textbook publisher finds that at an output of 10000 books, its AFC (per book) is $5. What is the TFC? The TFC is 50000 Q4 Suppose you are the owner of All Time Pizza store. You find that AVC is $10 and TVC is $20000. Find the quantity of Pizzas at your store. The quantity of pizzas at my store 2000 Q5 Jimmy and Laurie are the business partners who have opened a restaurant in Mississauga. They provide lunch and dinner in a sealed box. They are paying $18000 rent for their unit. Their total variable cost is $6000. Average cost is estimated as $6. Find the quantity of their boxes which they provide for lunch and dinner. 24000 (18000+6000) the quantity is 4000 boxes Q6 What are the features of Long period?

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 The features of long period is Use the following table to answer questions 7 to 9 Labour units Total product Average product Marginal product 0 0 ----------- ----------- 1 2 2 6 3 12 4 16 5 18 6 18 7 16 Q7 The marginal product of the 3 rd unit of labour is: A. 4 B. 6 C. 8 D. 2 Q8 When the firm hires 5 units of labour , the average product of labour is: A. 5 B. 3 C. 4 D. 3.6 Q9 Negative marginal returns set in with the addition of the: A. 1 st unit of labour C. 2 nd unit of labour B. 7 th unit of labour D. 4 th unit of labour

5 Q10 Which of the figures correctly depicts a firm which does not experience diseconomies of scale? A) graph A B) graph B C) graph C D) graph D Q11 In the given diagram, curves 1, 2, and 3 represent the: A) Average, marginal, and total product curves respectively. B) Marginal, average, and total product curves respectively. C) Total, average, and marginal product curves respectively. D) Total, marginal, and average product curves respectively. Q12 Total cost of producing 100 units of a product is $1200 and the MC of 101th units is $315. What will be the AC in this scenario? Q TC MC AC

Related Documents

Solution.pdf

Case Study 1 Page 2.png

Additional questions

Practice exer Ch 4 (BECN 150 (st) F-23 .docx

HW 10 (1).xlsx

Week 5 ~ Exam 1 on 12, & 14 (Answers).pdf

PS#2.docx

PubH 6466 - PS1 - questions.docx

MAT 240 Module 3 Assignment .docx

Problem Set 3.docx

MAT 240 Module 7 Assignment .docx

Midwest Shocks Excel Spreadsheet final.xlsx

Recommended textbooks for you

Economics:

Economics

ISBN:9781285859460

Author:BOYES, William

Publisher:Cengage Learning

Microeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics: Private and Public Choice (MindTap Cou...

Economics

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Cengage Learning

ECON MICRO

Economics

ISBN:9781337000536

Author:William A. McEachern

Publisher:Cengage Learning

Microeconomics A Contemporary Intro

Economics

ISBN:9781285635101

Author:MCEACHERN

Publisher:Cengage

SEE MORE TEXTBOOKS

Recommended textbooks for you

Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
ECON MICRO
Economics
ISBN:9781337000536
Author:William A. McEachern
Publisher:Cengage Learning
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage