ECON 101 Summer 2024 Problem Set 5 June 2024 Problem 1 (15pts) Mark and Jeff operate a small company that produces souvenir footballs. Their fixed cost is $2,000 per month. They can hire workers for $1,000 per worker per month. Their monthly production function for footballs is as given in the accompanying table. Quantity of Quantity of labor (workers) footballs 0 0 1 300 2 800 3 1,200 4 1,400 5 1,500 a. For each quantity of labor, calculate average variable cost (AVC), average fixed cost (AFC), average total cost (ATC), and marginal cost (MC). b. On one diagram, draw the AVC, ATC, and MC curves. C. At what level of output is Mark and Jeff's average total cost minimized?
ECON 101 Summer 2024 Problem Set 5 June 2024 Problem 1 (15pts) Mark and Jeff operate a small company that produces souvenir footballs. Their fixed cost is $2,000 per month. They can hire workers for $1,000 per worker per month. Their monthly production function for footballs is as given in the accompanying table. Quantity of Quantity of labor (workers) footballs 0 0 1 300 2 800 3 1,200 4 1,400 5 1,500 a. For each quantity of labor, calculate average variable cost (AVC), average fixed cost (AFC), average total cost (ATC), and marginal cost (MC). b. On one diagram, draw the AVC, ATC, and MC curves. C. At what level of output is Mark and Jeff's average total cost minimized?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:ECON 101 Summer 2024
Problem Set 5
June 2024
Problem 1 (15pts)
Mark and Jeff operate a small company that produces souvenir footballs. Their fixed
cost is $2,000 per month. They can hire workers for $1,000 per worker per month. Their
monthly production function for footballs is as given in the accompanying table.
Quantity of
Quantity of
labor (workers)
footballs
0
0
1
300
2
800
3
1,200
4
1,400
5
1,500
a. For each quantity of labor, calculate average variable cost (AVC), average fixed cost
(AFC), average total cost (ATC), and marginal cost (MC).
b. On one diagram, draw the AVC, ATC, and MC curves.
C.
At what level of output is Mark and Jeff's average total cost minimized?
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