17512510080Price270 322515$5,500, and its profit amounts to $20,375.$5,750, and its profit amounts to $20,375O $5,980, and its profit amounts to $25,750.O $6,180, and its profit amounts to $25,750.MCATCAVCQuantityRefer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm'sfixed cost amounts to

At the point where quantity (Q) equals 515 units in the graph, the average total cost (ATC) is $125,…

100 80 270 322 515 $5,500, and its profit amounts to $20,375. O $5,750, and its profit amounts to $20,375 $5,980, and its profit amounts to $25,750. $6,180, and its profit amounts to $25,750. Quantity Refer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's ixed cost amounts to

100 80 270 322 515 $5,500, and its profit amounts to $20,375. O $5,750, and its profit amounts to $20,375 $5,980, and its profit amounts to $25,750. $6,180, and its profit amounts to $25,750. Quantity Refer to Figure 14-7. Suppose AVC = $113 when the firm produces 515 units of output. Then the firm's ixed cost amounts to

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the Marginal Product of Labor(MPL) for the 2nd worker is 500 units. What is the firms average Fixed Cost (FC) of producing 1,500 gadgets?
3. (14 points) Let the production function be Q(K,L)=2K L. The cost of one unit of labor is w, the cost of one unit of capital is r, and the quanitity to produce is y. (a) (4 points) Set up the firm's cost-minimization problem, and clearly write down the con- Page 6 straint the firm faces. The cost minimization problem of the firm is min(KL) WL+rK. The constraint: y=2K!L!. anscribed Text (b) (5 points) What are two conditions that the optimal bundle L and K need to satisfy? Write down their expressions. Tangency: -=-; production: y = 2(K)! (L)!. (c) (5 points) Solve for the optimal bundle of L. and K that minimizes the firm's cost at y=144 by finding L and K", assuming that w $16 and r $81. By solving the system of two conditions in Part (b), it should be not that hard to get L = 162 and K* = 32.
A chair manufacturer hires its assembly-line labor for $20 an hour and calculates that the rental cost of its machinery is $10 per hour. Suppose that a chair can be produced using 4 hours of labor or machinery in any combination. If the firm is currently using 2 hours of labor for every two hours of machine time, is it minimizing its cost of production? If so, why? If not, how can it improve the situation? The firm O A. is not currently minimizing its cost of production because the ratio of the marginal product of labor to the marginal product capital is equal to the ratio of the wage rate to the rental cost. O B. is currently minimizing its cost of production because its marginal rate of technical substitution less than the ratio of input prices. C. is not currently minimizing its cost of production because the marginal product of labor divided by the wage is less than the marginal product of capital divided by the rental cost. O D. is currently minimizing its cost of production…
Bozo is a clown. He wants to start a clowning business where he sends other clowns out to birthday parties. Use the graph to Birthday parties answer the questions. 20 19 18 17 16 15 14 13 12 What is the marginal product of the third worker? O 2 11 10 6. 8. 7. 3.0 9. 3. 2. I 2 3 9 10 4 56 8. This production function demonstrates Workers diminishing marginal costs. a negative marginal product of labor. diminishing marginal returns to labor. diminishing output.
Refer to Figure 8.6, which shows just three of a firm's various possible short-run average cost curves. Suppose the firm is currently producing 160 units at an average cost of $90 per unit. Which of the following statements is true? $/unit 200 175 150 90 80 R 50 50 O ACI AC2 X 160 130 AC3 Output Figure 8.6 The firm could reduce its short-run average cost by producing less output. The firm is producing the level of output that minimizes short-run average cost. The firm is producing its output at the lowest possible long-run average cost. The firm could reduce its short-run average cost by producing more output.
3) Which of the following is not true about the marginal cost? Oo The marginal cost (MC) curve is U shaped. It can be calculated by dividing the change in the total cost by the change in the output. It is the additional cost incurred by a firm from changing output by a certain amount. It can be calculated by dividing the total cost by the quantity.
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Consider the same firm from the Monday assignment but now let's call that cost schedule total variable cost. Q 1 2 3 4 5 6 7 8 9 TVC 12 20 24 28 34 42 52 64 78 And let's imagine that there is fixed costs of 18 which is sunk in the short run. a. Show this firm's average total cost, average variable cost and marginal cost on a graph. Indicate the efficient scale (I don't think the book uses the words "efficient scale" but it's the quantity where profit would be zero when P=MC. We will discuss what I mean by "efficient scale but probably not before Thursday. By "indicate" I mean give the quantity and MC. I don't need every point to be exactly to scale, I just care about the general shape of the curves, where things cross and the location and…
Consider the following table illustrating the production function of gadgets. Furthermore, suppose the firm has fixed costs of $2,000/day and the wage rate is $250/day. What is the firm's variable cost of producing 2,600 gadgets? a $1,000 b $1,750 c $2,000 d none of the above
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