6. Ball Bearings Inc. faces costs of production as follows: Quantity 10 1 2 Total Fixed Costs $100 100 100 100 100 100 100 Total Variable Costs $0 50 70 90 140 200 360 a. Calculate the company's average fixed costs, average variable costs, average total costs, and marginal costs. b. The price of a case of ball bearings is $50. Seeing that she can't make a profit, the chief executive officer (CEO) decides to shut down operations. What are the firm's profits/losses? Was this a wise decision? Explain. c. Vaguely remembering his introductory economics course, the chief financial officer tells the CEO it is better to produce 1 case of ball bearings because marginal revenue equals marginal cost at that quantity. What are the firm's profits/losses at that level of production? Was this the best decision? Explain.

6. Ball Bearings Inc. faces costs of production as follows: Quantity 10 1 2 Total Fixed Costs $100 100 100 100 100 100 100 Total Variable Costs $0 50 70 90 140 200 360 a. Calculate the company's average fixed costs, average variable costs, average total costs, and marginal costs. b. The price of a case of ball bearings is $50. Seeing that she can't make a profit, the chief executive officer (CEO) decides to shut down operations. What are the firm's profits/losses? Was this a wise decision? Explain. c. Vaguely remembering his introductory economics course, the chief financial officer tells the CEO it is better to produce 1 case of ball bearings because marginal revenue equals marginal cost at that quantity. What are the firm's profits/losses at that level of production? Was this the best decision? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. Ball Bearings Inc. faces costs of production as follows:
Quantity
101234556
Total
Fixed Costs
$100
100
100
100
100
100
100
Total
Variable Costs
$0
50
70
90
140
200
360
a. Calculate the company's average fixed costs, average variable costs, average total
costs, and marginal costs.
b. The price of a case of ball bearings is $50. Seeing that she can't make a profit, the
chief executive officer (CEO) decides to shut down operations. What are the
firm's profits/losses? Was this a wise decision? Explain.
c. Vaguely remembering his introductory economics course, the chief financial
officer tells the CEO it is better to produce 1 case of ball bearings because
marginal revenue equals marginal cost at that quantity. What are the firm's
profits/losses at that level of production? Was this the best decision? Explain.

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