2. You are thinking to start your food catering business by making rolled tacos, which are often called taquitos (corn tortillas) and flautas (flour tortillas). As suggested, one important step is to estimate startup costs and prepare the budget. Your estimate shows, on a daily basis, your fixed cost (FC), including rent, utility, fees and tax, is about $300 per day. Your variable cost (VC) is largely depending on the units of labor (variable input) you are going to use. Hiring one labor will cost you $120 per day. Use the information given, to finish the questions below. (1) The table below presents the cost structure of your taco business. The first two columns give the number of your output or tacos (Y) and the units of labor inputs. To finish this table, you you need to calculate variable cost (VC), total cost (TC), marginal cost (MC), average variable cost (AVC) and average total cost (ATC). Note: MC= ATC / AY. Output, Variable input and Costs (per day) Таcos Labor VC TC MC AVC АТС 50 1 120 420 0.00 105 165 230 4. 288 340 385 420 8. 450 9. 460 10 (2) What is the shape of the daily marginal cost (MC) curve, the average variable cost (AVC) curve and the average total cost (ATC) curve? And why they look like that shape? After some study to your long-run average total cost, you find it has a similar shape as the short-run (daily) ATC curve. Why the long-run ATC curve has such a shape?
2. You are thinking to start your food catering business by making rolled tacos, which are often called taquitos (corn tortillas) and flautas (flour tortillas). As suggested, one important step is to estimate startup costs and prepare the budget. Your estimate shows, on a daily basis, your fixed cost (FC), including rent, utility, fees and tax, is about $300 per day. Your variable cost (VC) is largely depending on the units of labor (variable input) you are going to use. Hiring one labor will cost you $120 per day. Use the information given, to finish the questions below. (1) The table below presents the cost structure of your taco business. The first two columns give the number of your output or tacos (Y) and the units of labor inputs. To finish this table, you you need to calculate variable cost (VC), total cost (TC), marginal cost (MC), average variable cost (AVC) and average total cost (ATC). Note: MC= ATC / AY. Output, Variable input and Costs (per day) Таcos Labor VC TC MC AVC АТС 50 1 120 420 0.00 105 165 230 4. 288 340 385 420 8. 450 9. 460 10 (2) What is the shape of the daily marginal cost (MC) curve, the average variable cost (AVC) curve and the average total cost (ATC) curve? And why they look like that shape? After some study to your long-run average total cost, you find it has a similar shape as the short-run (daily) ATC curve. Why the long-run ATC curve has such a shape?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2. You are thinking to start your food catering business by making rolled tacos, which are often
called taquitos (corn tortillas) and flautas (flour tortillas). As suggested, one important step is to
estimate startup costs and prepare the budget. Your estimate shows, on a daily basis, your fixed
cost (FC), including rent, utility, fees and tax, is about $300 per day. Your variable cost (VC) is
largely depending on the units of labor (variable input) you are going to use. Hiring one labor
will cost you $120 per day. Use the information given, to finish the questions below.
(1) The table below presents the cost structure of your taco business. The first two columns give
you the number of your output or tacos (Y) and the units of labor inputs. To finish this table, you
need to calculate variable cost (VC), total cost (TC), marginal cost (MC), average variable cost
(AVC) and average total cost (ATC). Note: MC = ATC / AY.
Output, Variable input and Costs (per day)
Labor
VC
TC
MC
AVC
АТС
Тасos
50
1
120
420
0.00
105
165
3
230
4
288
340
385
420
450
460
10
(2) What is the shape of the daily marginal cost (MC) curve, the average variable cost (AVC)
curve and the average total cost (ATC) curve? And why they look like that shape? After some
study to your long-run average total cost, you find it has a similar shape as the short-run (daily)
ATC curve. Why the long-run ATC curve has such a shape?
56789
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