4) Pablo has a business painting walls in houses. He needs to choose one kind of brush to run the business every month and this is his fixed input in the short run. In the long run, he can choose a painting brush, roller brush, or a spray brush which have different fixed costs (FC). If he paints using the painting brush it takes a lot of man hours, i.e. variable cost (VC). If he uses the roller brush it takes less man hours. The spray brush takes the least amount of time. The following table shows the short-run fixed cost (FC) and variable cost (VC) of weekly production using each different level of the capital input. Number of walls 20 30 60 120 240 480 FC ($) paint brush 15 15 15 15 15 15 VC ($) paint brush 50 70 240 480 960 1440 FC ($) roller brush 50 50 50 50 50 50 VC ($) roller brush 40 60 150 300 600 1200 FC ($) spray brush 150 150 150 150 150 150 VC ($) spray brush 20 30 60 120 240 480 a) If Pablo plans to paint 20 walls this month, which type of capital input (paint brush, roller brush, or spray brush) should he choose? If he wants to paint 120 walls per month, which level of capital input should he choose? If he wants to paint 480 walls per week? Why? b) Draw out the short-run average total cost curve for a paint brush. On the same graph draw out the average total cost curve for a roller brush and spray brush. c) What does the long-run average total cost curve look like for Pablo's firm? Graph it.
4) Pablo has a business painting walls in houses. He needs to choose one kind of brush to run the business every month and this is his fixed input in the short run. In the long run, he can choose a painting brush, roller brush, or a spray brush which have different fixed costs (FC). If he paints using the painting brush it takes a lot of man hours, i.e. variable cost (VC). If he uses the roller brush it takes less man hours. The spray brush takes the least amount of time. The following table shows the short-run fixed cost (FC) and variable cost (VC) of weekly production using each different level of the capital input. Number of walls 20 30 60 120 240 480 FC ($) paint brush 15 15 15 15 15 15 VC ($) paint brush 50 70 240 480 960 1440 FC ($) roller brush 50 50 50 50 50 50 VC ($) roller brush 40 60 150 300 600 1200 FC ($) spray brush 150 150 150 150 150 150 VC ($) spray brush 20 30 60 120 240 480 a) If Pablo plans to paint 20 walls this month, which type of capital input (paint brush, roller brush, or spray brush) should he choose? If he wants to paint 120 walls per month, which level of capital input should he choose? If he wants to paint 480 walls per week? Why? b) Draw out the short-run average total cost curve for a paint brush. On the same graph draw out the average total cost curve for a roller brush and spray brush. c) What does the long-run average total cost curve look like for Pablo's firm? Graph it.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4) Pablo has a business painting walls in houses. He needs to choose one kind of brush to run the business
every month and this is his fixed input in the short run. In the long run, he can choose a painting brush,
roller brush, or a spray brush which have different fixed costs (FC). If he paints using the painting brush it
takes a lot of man hours, i.e. variable cost (VC). If he uses the roller brush it takes less man hours. The
spray brush takes the least amount of time. The following table shows the short-run fixed cost (FC) and
variable cost (VC) of weekly production using each different level of the capital input.
Number
of walls
20
30
60
120
240
480
FC ($)
paint brush
15
15
15
15
15
15
VC ($)
paint brush
50
70
240
480
960
1440
FC ($)
roller brush
50
50
50
50
50
50
VC ($)
roller brush
40
60
150
300
600
1200
FC ($)
spray brush
150
150
150
150
150
150
VC ($)
spray brush
20
30
60
120
240
480
a) If Pablo plans to paint 20 walls this month, which type of capital input (paint brush, roller brush, or
spray brush) should he choose? If he wants to paint 120 walls per month, which level of capital input
should he choose? If he wants to paint 480 walls per week? Why?
b)
Draw out the short-run average total cost curve for a paint brush. On the same graph draw out the
average total cost curve for a roller brush and spray brush.
c) What does the long-run average total cost curve look like for Pablo's firm? Graph it.
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