A computer company produces affordable, easyto-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. a. Create a table that shows the company’s output, total cost, marginal cost, average cost, variable cost, and average variable cost. b. At what price is the zero-profit point? At what price is the shutdown point? c. If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.
A computer company produces affordable, easyto-use home computer systems and has fixed costs of
$250. The marginal cost of producing computers is $700
for the first computer, $250 for the second, $300 for the
third, $350 for the fourth, $400 for the fifth, $450 for the
sixth, and $500 for the seventh.
a. Create a table that shows the company’s output,
total cost, marginal cost, average cost, variable
cost, and average variable cost.
b. At what
price is the shutdown point?
c. If the company sells the computers for $500, is it
making a
or loss? Sketch a graph with AC, MC, and AVC
curves to illustrate your answer and show the
profit or loss.
d. If the firm sells the computers for $300, is it
making a profit or a loss? How big is the profit
or loss? Sketch a graph with AC, MC, and AVC
curves to illustrate your answer and show the
profit or loss.
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