Output     AFC          AVC          ATC         MC        0                    $ ---        $  ---        $  ---           $ ---    1                    300         100             400        100    2         150         75              225    50    3                   100         70               170    60    4                   75         73               148    82    5                   60          80              140             108    6                   50          90               140            140    7                    43   103                146      182    8                   38   119                156       234    9          33   138                 171        283   10                   30   160                190                   361   How much is fixed cost (TFC)? The total fixed cost is 300.  For the following questions,  first check:  a)  is P greater than or equal to, AVC at any level of output?  If not, do not produce. You will lose only your fixed cost (TFC)  If you CAN cover AVC for some level of output,  you can produce and want to now get MC as close to MR (which in this case = price) without exceeding it. Produce that quantity. If you can’t cover your total costs, you will minimize your losses. If you CAN cover your total costs (and therefore earn an economic profit), you will maximize your profit.  If price is $50 per unit, how many would we produce?  If price is $105 per unit  If price is $145 per unit

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Output     AFC          AVC          ATC         MC    

   0                    $ ---        $  ---        $  ---           $ ---

   1                    300         100             400        100

   2         150         75              225    50

   3                   100         70               170    60

   4                   75         73               148    82

   5                   60          80              140             108

   6                   50          90               140            140

   7                    43   103                146      182

   8                   38   119                156       234

   9          33   138                 171        283

  10                   30   160                190                   361

 

  1. How much is fixed cost (TFC)?

The total fixed cost is 300.

 For the following questions,  first check:  a)  is P greater than or equal to, AVC at any level of output?  If not, do not produce. You will lose only your fixed cost (TFC) 

If you CAN cover AVC for some level of output,  you can produce and want to now get MC as close to MR (which in this case = price) without exceeding it. Produce that quantity. If you can’t cover your total costs, you will minimize your losses. If you CAN cover your total costs (and therefore earn an economic profit), you will maximize your profit.

  1.  If price is $50 per unit, how many would we produce?

  2.  If price is $105 per unit

  3.  If price is $145 per unit

  4.  If price is $190 per unit



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