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Q3:
What are the kinds of cost which firm face in short run. Explain theoretically and graphically the relation of these costs with the output.
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- 5. A toy factory has an annual demand for 20,000 of tops. It cost $1.50 to store one top per year. It costs $500 for each production set-up for these tops and $3.50 to manufacture a single top. Find the total cost function. fM Total Cost of Production is: T(g) = : + gM +, where q is number of units per productionm run; k is cost of storing 2 one item per year; g is cost of manufacturing a single unit of the product; f is fixed set-up cost for a production run; M is total demand of units per year. Given Constants Total Cost Function Find the optimum number of tops per batch as well as the number of batches per year. optimum number of tops optimum number of batches Find the total cost for this optimum production schedule. Optimum Total CostQUESTION 2 A firm is considering changing its plant size. It calculates the amount of output it would be able to produce and the total cost for various plant sizes, as shown in the accompanying table. If the firm is currently using plant size C, the firm is experiencing which of the following? Plant Size Quantity Total Cost ($) A 1 10 10 80 C 100 900 200 2,000 500 5,500 F 1,000 15,000 economies of scale O diseconomies of scale constant returns to scale O diminishing marginal product O increasing marginal product1:27 Ces A firm's output, variable costs, and total costs are given in the table below. Instructions: Enter your answers as a whole number. a. Calculate marginal cost using the formula given in the chapter: ATotal cost/AQuantity. Quantity 10 20 30 50 Quantity 0 10 20 30 40 Variable cost ($) b. Calculate AVariable cost/AQuantity. 50 50 120 200 300 420 Variable cost 50 120 200 300 Total cost ($) 420 100 150 220 300 400 520 Total cost ($) 100 150 220 300 400 520 Marginal cost ($) AVariable cost ($)/ AQuantity
- Section 11.5 The Short-Run and Long-Run Average Total Cost Curves exhibit 1 SRATC for small plant SRATC for medium plant SRATC tor large plant LRATC B $500 $400 Economies of Scale Constant Returns to Saie 1,000 1,200 Quantity of Computers (per day) Notice that the long-run average total cost (LRATC) curve is much flatter than the short-run average total cost (SRATC) curve. This is because firms can be more flexible in the long run-they can choose which short-run cost curve they want to operate along, by choosing their plant scale. But they cannot do this in the short run, during which they are stuck with their existing short-run cost curve. That is, in the short run, the firm operates with the short-run curve it has based on past decisions. However, in the lang run, the firm is able to choose the short-run curve it wants to use. In Exhibit 1 above, explain why the curve between A and B looks different than the curve from A to C. Provide an example of how a firm could opt to follow the…The cost structure of a manufacturer of microchips is described in the table in the next column. The firm’s fixed costs equal to $10 per day. Calculate the average variable cost, average fixed cost, and average total cost at each output level. Output (microchips per day) Total Cost of Output ($ thousands) 0 10 25 60 50 95 75 150 100 220 125 325 150 4651,200 B TC 1,000 850 700 TVC A 500 2 3 Number of microwave ovens 6. Refer to the figure above. Based on the information shown, the average fixed costs of producing two units of output are: 500 Cost in dollars
- 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 1002. A company's total cost function as TC = 4,900 + 12Q+4Q Derive the following equations and compute their respective values when Q = 35 a. Average Total Cost (ATC): b. Average Variable Cost (AVC): C. Average Fixed Cost (AFC): d. Marginal Cost (MC):Vinnie’s Painting Company specializes in painting houses. Their cost schedule is as follows:Output TFC TVC TC AFC AVC ATC MC 0. 10001. 1002. 1003. 4004. 4505. 16006. 32007 6400 A) Given the partial data available, finish the table and calculate all the costs. B)What is the minimum efficient scale of Vinnie’s company?C)What is the marginal cost of 6 houses?D)If Vinnie charges $825 per house, how many houses he should paint to maximize profit
- Use the following table to answer the next question. Output 0 1 2 3 4 5 Total Cost $5 9 12 15 20 27 The average total cost of producing 4 units of output is $ type your answer... Marginal cost is equal to average total cost between type your answer... and type your answer... units of output.Chris The use of fixed cost items to magnify the firm's results Correct! What are some uses for break-even analysis? Select all that apply, then click Submit below To see how much the changes in cost affect variable costs. To see how much the changes in volume affect cost and profit. To determine the magnitude of operations necessary to avoid loss. To figure out the most efficient level of fixed costs for the firm. To figure out the most inefficient way to make profit. To figure out the operating leverage. SubmitQuestion 10 TTT Quantity of Output Fixed Costs Variable Costs 15 2 15 12 4 15 23 15 38 8 15 46 10 15 70 Based on the above table, what is the marginal cost of producing the 6th unit? 8. 7.5 10.5 5.5
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