Show full answers and steps to part a) b) & c) **Exercise 2: Cost Structure Analysis for Funnel Cake Production**You are the cost accountant of a major producer of funnel cakes. Your task is to fill in the table to inform the company’s CEO about the cost structure of the firm.| Output q | Total Fixed Cost TFC | Total Variable Cost TVC(q) | Short run Total Cost STC(q) | Average Fixed Cost AFC(q) | Average Variable Cost AVC(q) | Short run Average Cost SAC(q) | Short run Marginal Cost SMC(q) ||----------|----------------------|----------------------------|-----------------------------|---------------------------|------------------------------|-------------------------------|--------------------------------|| 0 | 50 | 0 | | | | | || 1 | 50 | 10 | | | | | || 2 | 50 | 17.5 | | | | | || 3 | 50 | 22.5 | | | | | || 4 | 50 | 25 | | | | | || 5 | 50 | 30 | | | | | || 6 | 50 | 37.5 | | | | | || 7 | 50 | 47.5 | | | | | || 8 | 50 | 60 | | | | | || 9 | 50 | 75 | | | | | || 10 | 50 | 100 | | | | | || 11 | 50 | 150 | | | | | |**Tasks:**b) **Graph Plotting:** - Plot the following on a graph: - Short run Total Cost \( STC(q) \) - Total Variable Cost \( TVC(q) \) - Total Fixed Cost \( TFC \)c) **Curve Analysis:** - On a separate graph, plot the following curves: - Short run Average Cost \( SAC(q)

Total cost is the total cost of production of output. Total cost is the sum of total fixed cost and…

Suppose you are the cost accountant of a major producer of funnel cakes. a) Fill in the table so that you can inform the company's CEO about the cost structure of the firm. Exercise 2 Output Total q Fixed Cost TFC 50 50 50 50 50 50 50 50 50 50 50 50 0 1 2 3 4 5 6 7 8 9 10 11 Total Variable Cost TVC(q) 0 10 17.5 22.5 25 30 37.5 47.5 60 75 100 150 Short run Average Total Fixed Cost Cost STC(q) AFC(q) Average Short run Variable Average Cost Cost AVC(q) SAC(q) Short run Marginal Cost SMC(q) b) On a graph, plot STC(q), TVC(q) and TFC. c) On a separate graph plot SAC(q), AFC(q), AVC (q) and SMC(q) curves. Briefly discuss the relationships between SMC(q) with SAC(q) and AVC(q).

Suppose you are the cost accountant of a major producer of funnel cakes. a) Fill in the table so that you can inform the company's CEO about the cost structure of the firm. Exercise 2 Output Total q Fixed Cost TFC 50 50 50 50 50 50 50 50 50 50 50 50 0 1 2 3 4 5 6 7 8 9 10 11 Total Variable Cost TVC(q) 0 10 17.5 22.5 25 30 37.5 47.5 60 75 100 150 Short run Average Total Fixed Cost Cost STC(q) AFC(q) Average Short run Variable Average Cost Cost AVC(q) SAC(q) Short run Marginal Cost SMC(q) b) On a graph, plot STC(q), TVC(q) and TFC. c) On a separate graph plot SAC(q), AFC(q), AVC (q) and SMC(q) curves. Briefly discuss the relationships between SMC(q) with SAC(q) and AVC(q).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Show full answers and steps to part a) b) & c)

**Exercise 2: Cost Structure Analysis for Funnel Cake Production**

You are the cost accountant of a major producer of funnel cakes. Your task is to fill in the table to inform the company’s CEO about the cost structure of the firm.

| Output q | Total Fixed Cost TFC | Total Variable Cost TVC(q) | Short run Total Cost STC(q) | Average Fixed Cost AFC(q) | Average Variable Cost AVC(q) | Short run Average Cost SAC(q) | Short run Marginal Cost SMC(q) |
|----------|----------------------|----------------------------|-----------------------------|---------------------------|------------------------------|-------------------------------|--------------------------------|
| 0 | 50 | 0 | | | | | |
| 1 | 50 | 10 | | | | | |
| 2 | 50 | 17.5 | | | | | |
| 3 | 50 | 22.5 | | | | | |
| 4 | 50 | 25 | | | | | |
| 5 | 50 | 30 | | | | | |
| 6 | 50 | 37.5 | | | | | |
| 7 | 50 | 47.5 | | | | | |
| 8 | 50 | 60 | | | | | |
| 9 | 50 | 75 | | | | | |
| 10 | 50 | 100 | | | | | |
| 11 | 50 | 150 | | | | | |

**Tasks:**

b) **Graph Plotting:**
- Plot the following on a graph:
- Short run Total Cost \( STC(q) \)
- Total Variable Cost \( TVC(q) \)
- Total Fixed Cost \( TFC \)

c) **Curve Analysis:**
- On a separate graph, plot the following curves:
- Short run Average Cost \( SAC(q)

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Step 1: Define TC, AC and MC.

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Step 2: Calculate the values given in the table.

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Step 3: Plot STC, TFC and TVC on the graph.

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Step 4: Plot SAC, AFC and AVC on the graph.

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