3. The accompanying table shows total cost of producing Mr. Leung's Rental Trucks.|Quantity of Rental TrucksTotal Cost|$500,000540,0001560,000570,000590,000620,0004660,000|7720,000|800,000920,0001,100,0008.910a. What is Mr. Leung's fixed cost?b. For each level of output, calculate the variable cost (VC). For each level of output except zerooutput, calculate the average variable cost (AVC), average total cost (ATC), and average fixed cost|(AFC). What is the minimum-cost output?c. For each level of output, calculate this manufacturer's marginal costd. On one diagram, draw the manufacturers AVC, ATC, AFC, and MC curves using a differentNON-RED color per curve!

a. Mr Leung Fixed cost is 500000 $ (cost when output is zero) FC = 500000 VC = TC - FC ATC = TC /…

Answered: What is Mr. Leung's fixed cost? b. For…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 5CQQ

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Similar questions

Compute the average total cost, average variable cost, and marginal cost of producing 50 and 72 haircuts. Draw the graph of line three curves between 60 and 72 haircuts.
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?
What is the relationship between marginal product and marginal cost? (Hint: Look at the curves.) Why do you suppose that is? Is this relationship the same in the long run as in the short run?
Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
Return to Figure 7.7. What is the marginal gain in output from increasing the number of batters from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns? Figure 7.7 How output Affects Total costs
How do we calculate each of the following: marginal cost, average total cost, and average variable cost?
Are there fixed costs in the lung-run? Explain briefly.
Are fixed costs also sunk costs? Explain.

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