Allstate Heating Company has $12,000 fixed costs each week. Its total variable costs change as the number of water heaters produced each week changes, as follows: Water HeatersTotal Variable Cost1$60021,80033,60046,00059,000612,600716,800821,600927,0001033,000 Add columns to the table and calculate the total cost, marginal cost, average fixed cost, average variable cost and average total cost for all levels of output. Using Microsoft Excel, create one correctly labeled graph showing the marginal cost, average fixed cost, average variable cost and average total cost curves. Explain with economics why the average total cost curve has a U shape, when neither of its components, average fixed cost nor average variable cost, does. Allstate paid $5,000 for researching the area before setting up its business location. How does this cost figure into its costs of production?

Cost is an economic concept that refers to the amount of resources, typically measured in terms of…

Answered: Allstate Heating Company has $12,000…

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Chapter1: Making Economics Decisions

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Allstate Heating Company has $12,000 fixed costs each week. Its total variable costs change as the number of water heaters produced each week changes, as follows:

Add columns to the table and calculate the total cost, marginal cost, average fixed cost, average variable cost and average total cost for all levels of output.
Using Microsoft Excel, create one correctly labeled graph showing the marginal cost, average fixed cost, average variable cost and average total cost curves.
Explain with economics why the average total cost curve has a U shape, when neither of its components, average fixed cost nor average variable cost, does.
Allstate paid $5,000 for researching the area before setting up its business location. How does this cost figure into its costs of production?

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