The following graph shows the short-run average total cost curves and the long-run average total cost curve for a publishing firm. The five markedquantities indicate points of tangency between each short-run average total cost curve (ATC) and the long-run average total cost curve (LRATC); forexample, Qi marks the point of tangency between ATC1 and LRATC.The orange point on ATC, indicates the firm's current output level in the short run (Q2).ATC,ATC5ATCALRATCATC,ATC,Q,Q5OUTPUTCOST PER UNIT In the long run, if the firm decides to keep output at its initial level, what will it likely do?O Stay on ATC, but decrease to the point touching LRATCShut downO Shift to operate on ATC2O Shift to operate on ATC3True or False: The minimum efficient scale is achieved at the minimum point on each average total cost curve.FalseO True

Long-run average total cost (LRATC) is a business statistic that indicates the average cost per unit…

Answered: The following graph shows the short-run…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the Acme Gumball Company has a fixed proportions production function that requires it to use two gumball presses and one worker to produce 1,000 gumballs per hour. a. Explain why the cost per hour of producing 1,000 gumballs is 2v + w (where v is the hourly rent for gumball presses and w is the hourly wage). b. Assume Acme can produce any number of gumballs they want using this technology. Explain why the cost function in this case would be TC = q(2v +w), where q is output of gumballs per hour, measured in thousands of gumballs. c. What is the average and marginal cost of gumball production (again, measure output in thousands of gumballs)? (show the complete formula) Draw the graph for the average and marginal cost curves for gumballs assuming v=3, w-5 (show working) Now draw the graph for these curves for v=6, w=5.( show working) Explain why these curves have shifted.
Suppose the imaginary company of Panthera is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand's total cost of production at several different quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost (Pairs) (Dollars) (Dollars) о 120 1 210 2 270 3 315 4 380 5 475 6 630 (Dollars) (Dollars) Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair) On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the…
A firm has the following average total cost curves: Quantity ATC11 ATC22 ATC33 ATC44 1 100 150 50 200 2 80 130 45 170 3 60 110 40 140 4 50 90 45 110 5 55 70 60 90 6 85 60 80 70 7 120 75 100 65 In the long run what is the average total cost when five goods are produced? $
6. Firm's Costs 2 Consider the following cost information for a pizzeria: Quantity Total Cost Variable Cost (Dozens of pizzas) (Dollars) (Dollars) 280 1 320 40 2 350 70 3 380 100 4 420 140 470 190 6 530 250 The pizzeria's fixed cost is Complete the third column of the following table by calculating the marginal cost per dozen pizzas using the information on total cost. Then complete the final column by calculating the marginal cost per dozen pizzas using the information on variable cost. Quantity Total Cost Marginal Cost Variable Cost Marginal Cost Using Total Cost (Dollars) Using Variable Cost (Dollars) (Dozens of pizzas) (Dollars) (Dollars) 280 320 40 350 70 AA
The four statements below describe properties of a firm's short run cost curves. Complete the statements using words from the list given below. • The increase in total cost from producing an additional unit of output is called • Average cost is the total cost of When a firm's average cost curve crosses the marginal cost curve, average costs are When a firm's average cost is greater than marginal cost, then producing an additional unit of output will result in a fall in average cost marginal cost at a minimum at a maximum production production divided by the quantity of units produced
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 = 100 520 660 800 1 2 3 Q=200 400 480 560 Average Total Cost (Dollars per bike) Q=300 Q=400 320 400 On th 320 400 320 320 Q = 500 560 480 400 Q = 600 800 660 520 per bike. Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $ 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 one factory two factories green plot the three short-run average total cost curves (SRATC) for Ike's Bikes from…
An economist estimated that the cost function of a single-product firm is:C(Q) = 60 + 30Q + 25Q2 + 5Q3.Based on this information, determine the following:a. The fixed cost of producing 10 units of output.$ b. The variable cost of producing 10 units of output.$ c. The total cost of producing 10 units of output.$ d. The average fixed cost of producing 10 units of output.$ e. The average variable cost of producing 10 units of output.$ f. The average total cost of producing 10 units of output.$ g. The marginal cost when Q = 10.$
Fill in the blanks in the table below. The problem is a "puzzle" so the blanks are not necessarily filled in sequentially. (Hint: Determine the total fixed cost first.) Instructions: Enter your answers rounded to two decimal places. Total Average Fixed Cost Average Total Cost Marginal Cost Output Variable Total Cost Cost 1 $10.00 $9.76 $9.76 $19.76 2 $19.06 $14.53 $9.30 $29.06 3 $3.33 $12.63 $37.90 4 $2.50 $36.31 $11.58 $8.41 $46.31 $2.00 $44.30 $10.86 LO
The average fixed cost curve will never intersect with either the horizontal or vertical axis. graph. There must be proper positioning of the Average Total Cost curve and Average Variable Cost curve. graph. The Average Total Cost curve and Average Variable Cost curve must not touch (in between is average fixed costs – which can never be zero). graph.
Let F be the fixed cost of production, let VC be the variable cost of production, C be the total cost, MC be the marginal cost, AFC, the average fixed cost, AVC, the average variable cost, and AC, the average cost. Complete the following cost table. (Enter numeric responses rounded to two decimal places.) Output (q) 1 2 3 4 31 5 6 7 8 9 06 10 F $200 200 200 200 200 200 200 200 200 VC $48 84 108 120 144 344 380 228 428 288 488 60 560 с MC $248 $48 AFC AVC AC $200.00 $48.00 $248.00 284 36 100.00 42.00 142.00 308 24 66.67 36.00 12 50.00 30.00 80.00 24 40.00 68.80 36 33.33 30.00 63.33 28.57 32.57 61.14 36.00 61.00 40.00 62.22 44.40 360 444 72 84 22.22 20.00
The graph represents a short-run average total cost curve and the long run average total cost curve for a specific firm. Average total cost 10 W; Y Y; Z Y; W C Z; Y Z Supose this firm chooses to produce Q3 units of output. In the short run, the firm will produce at point but in the long run the firm will choose to produce at point 9₂2 W Q3

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