Quantity Total Fixed Costs Total Variable Costs (Dollars) (Dollars) 0 180 0 1 180 80 2 180 140 3 180 180 4 180 240 5 180 320 6 180 450 Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production. Quantity Total Cost Marginal Cost Average Fixed Cost Average Variable Cost Average Total Cost (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 0 1 2 3 4 5 6 The price of a case of ball bearings is $80. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is . (Note: If the firm suffers a loss, enter a negative number in this cell.) True or False: This was a wise decision. True False Vaguely remembering his introductory economics course, the company's 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. At this level of production, the firm's profit is . (Note: If the firm suffers a loss, enter a negative number in this cell.). True or False: This is the best decision the firm can make. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Quantity	Total Fixed Costs	Total Variable Costs
(Dollars)	(Dollars)
0	180	0
1	180	80
2	180	140
3	180	180
4	180	240
5	180	320
6	180	450

Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production.

Quantity	Total Cost	Marginal Cost	Average Fixed Cost	Average Variable Cost
(Dollars)	(Dollars)	(Dollars)	(Dollars)	(Dollars)
0

1

2

3

4

5

6

The price of a case of ball bearings is $80. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations.

The firm's profit in this case is

. (Note: If the firm suffers a loss, enter a negative number in this cell.)

True or False: This was a wise decision.

True

False

Vaguely remembering his introductory economics course, the company's 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.

At this level of production, the firm's profit is

. (Note: If the firm suffers a loss, enter a negative number in this cell.).

True or False: This is the best decision the firm can make.

True

False

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