Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - . If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 - . Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3-is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises - relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).

Behind the Supply Curve: Inputs and Costs – End of Chapter Problem Consider Daniella's concrete-mixing business described in VC Problem 12. Assume that Daniella purchased 3 trucks, expecting to produce 40 orders per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400 a. If business were to decline to 20 orders per week, Daniella's average total cost per order in the short run would be $400 - . If her business were to boom to 60 orders per week, her average total short-run cost per order would be $270 - b. At 20 orders per week, Daniella's average total cost per order in the long run would be $270 - . Daniella's short-run average total cost of producing 20 orders per week-when the number of trucks is fixed at 3-is greater than her long-run average total cost of producing 20 orders per week because in switching to a larger - scale of operations, her fixed cost rises - relative to her variable cost. c. In the diagram, plot Daniella's long-run average total cost curve (LRATC) and her short-run average total cost curve if she owns 3 trucks (ATC3).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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