Ball Bearings, Inc. faces costs of production as follows:QuantityTotal Fixed CostsTotal Variable Costs0$100$0110050210070310090410014051002006100360a. Calculate the company's average fixed costs, average variable costs, average total costs, and marginal costs at each level of production.b. The price of a case of ball bearings is $50. Seeing that he can't make a profit, the chief executive officer (CEO) decides to shut down operations. What is the firm's profit/loss? 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 is the firm's profit/loss at that level of production? Was this the best decision? Explain.
Ball Bearings, Inc. faces costs of production as follows:
Quantity
Total Fixed Costs
Total Variable Costs
0
$100
$0
1
100
50
2
100
70
3
100
90
4
100
140
5
100
200
6
100
360
a. Calculate the company's average fixed costs, average variable costs, average total costs, and marginal costs at each level of production.
b. The price of a case of ball bearings is $50. Seeing that he can't make a profit, the chief executive officer (CEO) decides to shut down operations. What is the firm's
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 is the firm's profit/loss at that level of production? Was this the best decision? Explain.
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