ADVANCED ANALYSIS A firm faces the following costs: total cost of capital = $1,000; price paid for labor = $12 per labor unit; and price paid for raw materials = $4 per raw-material unit. Instructions: In parts a and b, enter your answers for total cost as a whole number. Round your answers for average total cost to 2 decimal places. In part c, enter your answer as a whole number. a. Suppose the firm can produce 5,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5,000 units of output? TC = $ 4,000| ATC = $ 0.80 O b. Now assume the firm improves its production process so that it can produce 6,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,000 units of output? TC = $ 4,000 O ATC = $ 0.66 8 c. If units of output can always be sold for $1 each, then by how much does the firm's profit increase after it improves its production process? $ 2,000|

ADVANCED ANALYSIS A firm faces the following costs: total cost of capital = $1,000; price paid for labor = $12 per labor unit; and price paid for raw materials = $4 per raw-material unit. Instructions: In parts a and b, enter your answers for total cost as a whole number. Round your answers for average total cost to 2 decimal places. In part c, enter your answer as a whole number. a. Suppose the firm can produce 5,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5,000 units of output? TC = $ 4,000| ATC = $ 0.80 O b. Now assume the firm improves its production process so that it can produce 6,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,000 units of output? TC = $ 4,000 O ATC = $ 0.66 8 c. If units of output can always be sold for $1 each, then by how much does the firm's profit increase after it improves its production process? $ 2,000|

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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