Question : Imagine a small juice shop that only fresh fruit juice. i) Discuss the concept of marginal cost and average total cost using the given situation. ii) Discuss the law of diminishing marginal returns using the given situation. Note: (Please answer all but no need to draw any tables and diagrams in your answers)
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Question : Imagine a small juice shop that only fresh fruit juice.
i) Discuss the concept of marginal cost and
ii) Discuss the law of diminishing marginal returns using the given situation.
Note: (Please answer all but no need to draw any tables and diagrams in your answers)
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- 4. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Q= = 100 1 2 3 180 250 320 Q = 200 120 160 200 Average Total Cost (Dollars per bike) Q = 300 Q = 400 80 120 80 80 120 80 Q = 500 200 160 120 Q: = 600 320 250 180 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes usingConsider the production of hamburgers. The average total cost (ATC) and average fixed cost (AFC) of producing hamburgers are illustrated in the graph to the right Use the four-point curve drawing tool to graph the average variable cost of producing one, two, three, and four thousand hamburgers. Properly label this curve Carefully follow the instructions above, and only draw the required objects. Cost (cente per unit) 26 24- 22- 20 18- 16 14- 12- 10 B 6 4- 2 ATC AFG Quantity of hamburgers (in 1000s) Q duHW#4 (Costs of Production, Competitive Markets) Attempts: Keep the Highest: /6 20. Problems and Applications Q3 Consider total cost and total revenue, given in the fllowing table: In the final column, enter profit for each quantity. (Note: If the firm suffers a loss, enter a negative number in the appropriate cell.) Total Cost Quantity (Dollars) Marginal Cost Marginal Revenue (Dollars) Total Revenue Profit (Dollars) (Dollars) (Dollars) 12 3 11 18 4 15 24 20 30 26 36 35 42 In order to maximize profit, how many units should the firm produce? Check all that apply. 4 6. In the previous table, enter marginal revenue and marginal cost for each quantity.
- 2.)Do fixed costs refer to the long run or short run? Why?3) Suppose that labor is the only variable input in the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor?4) What are economies of scale? What are economies of scope? What is the difference between the two?a. Calculate marginal cost using the formula given in the chapter: ATotal cost/AQuantity. Quantity Variable cost ($) Total cost ($) Marginal cost ($) 0 0 100 1 60 160 2 110 210 100 3 180 280 100 4 270 370 100 5 400 500 100 b. Calculate AVariable cost/AQuantity. Quantity Variable cost ($) AVariable cost Total cost ($) ($)/ AQuantity 0 0 100 1 60 160 100 2 110 210 100 3 180 280 100 4 270 370 100 5 400 500 100Just a discussion post no format needed Topic: Increase in Fixed Costs 1. Suppose a business experiences a sudden increase in its fixed costs. For example, suppose property taxes increase dramatically. What impact, if any, will this have on the following: 1. the firm's AFC (average fixed cost); 2. the firm’s AVC (average variable cost); 3. the firm’s ATC (average total cost); and, 4. the firm’s MC (marginal cost)? 2. What changes, if any, is there likely to be in these same cost CURVES?
- Question When do firms decide to shut down production in the short run? Explain it. How is the short run average cost curve and the long run average cost curve shaped? What is the difference between them? Graphical representation of the short-run total cost curve showing total cost, fixed cost, variable cost: and The marginal cost and average total cost:QUESTION 2 Figure and Table: Variable, Fixed, and Total Costs Total cost $2,500 2,000 1,500 1,000 500 Points on Graph A B C E 0 G H I A B₁ Reference: Ref 6-11 с 20 1 1 1 40 60 80 100 Quantity of wheat (bushels) DEFGH Total cost, TC Quantity of Labor (workers), L 0 1 2 3 4 6 8 Quantity of Wheat (bushels), Q 0 PORTARI 19 36 51 64 75 84 91 96 Variable Cost, VC $ 0 200 400 600 800 1,000 1,200 1,400 1,600 Fixed Cost, FC $400 400 400 400 400 400 400 400 400 Total Cost, TC $ FC + VC 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 (Figure and Table: Variable, Fixed, and Total Costs) The marginal cost of increasing production from 0 to 19 bushels of wheat is: OA. $22.22. B. $11.76. OC. $10.53 D. $11.11. OE. $23.53.5. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = = 500 Q = 600 %3D 1 360 200 160 240 400 720 2 540 300 160 160 300 540 720 400 240 160 200 360 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using
- 2. You are thinking about setting up a lemonade stand. The stand itself costs $200. The ingredients for each cup of lemonade cost $0.50. a. How much is your fixed cost of doing business? How much is your variable cost per cup? b. Construct a table showing your total cost, average total cost, and marginal cost for output levels varying from 0 to 10 gallons. (Hint: There are 16 cups in a gallon)(b) Also, use this information to then set up another diagram showing the firm's short run marginal cost (MC), average total cost (ATC), and average variable cost (AVC), with output on the horizontal axis (For the marginal cost, remember that when you graph marginal values you should always put them in the middle of the horizontal range that they are calculated over).HW#4 (Costs of Production, Competitive Markets) Back to Assignment Attempts: Keep the Highest: /5 21. Problems and Applications Q4 Ball Bearings, Inc., faces costs of production as follows: Total Fixed Costs Total Variable Costs Quantity (Dollars) (Dollars) 180 180 80 180 140 3 180 180 180 240 180 320 180 450 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. Total Cost Marginal Cost Average Fixed Cost Average Variable Cost Average Total Cost Quantity (Dollars) (Dollars) (Dollars) (Dollars) (Dollars)