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 zero-profit point? 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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