Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 11, Problem 15QE
(a)
To determine
Determine the average fixed cost (AFC),
(b)
To determine
Graphically illustrate the average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves.
(c)
To determine
Determine the relationship between the MC curve, AVC curve, and ATC curve.
(d)
To determine
Identify the changes on the average cost curves when the fixed cost dropped.
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Students have asked these similar questions
This is a graph of our firm’s costs. Label the lines on the graph using the following labels: average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) marginal cost (MC). Then label the shut down and breakeven points on the graph.
The following table shows data for quantity (Q), variable cost (VC), and fixed cost
(FC) for a ski company.
a) Fill the table for total cost (TC), average variable cost (AVC), average total cost
(ATC), and marginal cost (MC). Make sure to show your work for at least one
line.
Q
VC
FC
TC
ATC
AVC
MC
30
1
10
30
25
30
3
45
30
4
70
30
100
30
6
135
30
b) Now suppose the firm decides to produce a quantity of 5 units (Q=5), and it
sells for a price of $25 each. Answer the following:
1. Calculate the company's profits or losses
2. How can you tell at a glance whether the company is making or losing money
at this price by looking at average cost?
3. At the given quantity and price, is the marginal unit produced adding or
subtracting to profits? Should the fırm produce at this level of output?
The Towson Table Company has fixed costs of
$5,000 per month. Variable cost at the current
level of output of 100 tables per month is $10,000.
Which of the following is true for the company?
A. Average cost of production is $150.
Average cost of production is $100.
C. Average fixed cost of production is $150.
Average variable cost of production is
$150.
B.
D.
Chapter 11 Solutions
Microeconomics
Ch. 11.1 - Prob. 1QCh. 11.1 - Prob. 2QCh. 11.1 - Prob. 3QCh. 11.1 - Prob. 4QCh. 11.1 - Prob. 5QCh. 11.1 - Prob. 6QCh. 11.1 - Prob. 7QCh. 11.1 - Prob. 8QCh. 11.1 - Prob. 9QCh. 11.1 - Prob. 10Q
Ch. 11 - Prob. 1QECh. 11 - Prob. 2QECh. 11 - Prob. 3QECh. 11 - Prob. 4QECh. 11 - Prob. 5QECh. 11 - Prob. 6QECh. 11 - Prob. 7QECh. 11 - Prob. 8QECh. 11 - Prob. 9QECh. 11 - Prob. 10QECh. 11 - Prob. 11QECh. 11 - Prob. 12QECh. 11 - Prob. 13QECh. 11 - Prob. 14QECh. 11 - Prob. 15QECh. 11 - Prob. 16QECh. 11 - Prob. 17QECh. 11 - Prob. 18QECh. 11 - Prob. 19QECh. 11 - Prob. 1QAPCh. 11 - Prob. 2QAPCh. 11 - Prob. 3QAPCh. 11 - Prob. 4QAPCh. 11 - Prob. 5QAPCh. 11 - Prob. 1IPCh. 11 - Prob. 2IPCh. 11 - Prob. 3IPCh. 11 - Prob. 4IPCh. 11 - Prob. 5IP
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Similar questions
- Macmillan Learning a. In the accompanying diagram, place the points labeled Minimum AVC and Minimum ATC in their correct places. Marginal cost, average cost ($ per unit) True False Minimum AVC Minimum ATC F MC Quantity b. Average variable cost reaches its minimum point at a lower level of output than average total cost.arrow_forwardHow would I describe these?arrow_forwardGraph the curves for total cost, ATC, AVC, AFC, MC. Explain shape of these curves and the relationship between ATC and MC.arrow_forward
- Macmillan Learning Slider owns a hamburger restaurant. Slider's minimum average variable cost is $10 at a quantity of 100 hamburgers, and his minimum average total cost is $15 at a quantity of 200 hamburgers. His total fixed cost is $300. Use this information to answer the questions. What is Slider's AVC when he sells 200 hamburgers? Slider's AVC: $ At a quantity of 250 hamburgers, the average total cost curve isarrow_forwardSlider owns a hamburger restaurant. Slider's minimum average variable cost is $10 at a quantity of 100 hamburgers, and his minimum average total cost is $15 at a quantity of 200 hamburgers. His total fixed cost is $300. Use this information to answer the questions. What is Slider's AVC when he sells 200 hamburgers? Slider's AVC: $ At a quantity of 250 hamburgers, the average total cost curve is increasing. below average variable cost. not able to be calculated from the information given. Or, none of the other answers are correct. decreasing.arrow_forward7) What is the relationship between AFC, AVC & ATC? How are these calculated? 8) A firms produces an output of 10 units, when their total cost is $50 and their fixed costs are $10. Find: VC, AFC, AVC & ATC. 9) What are two examples of fixed costs?arrow_forward
- 3. XYZ corporation produces widgets. Its short-run marginal cost curve is given by MC (q) = 10 – 5q + q² (this is a parabola whose minimum occurs at q = 2.5). XYZ's fixed costs are 10. In a two panel diagrams, graph the following cost curves: (a) total cost, (b) total variable cost, (c) total fixed cost, (d) marginal cost, (e) average variable cost, and (f) average total cost. Your diagrams do not need to be scale, but must be internally consistent (i.e. the relationships between different curves must be correct). You do not need to find mathematical expressions for the other cost curves – you only need to sketch lines that are consistent with the shape of the marginal cost curve.arrow_forwardQuestion attachedarrow_forwardSuppose honda's total cost of producing four cars is $225,000 and its total cost of producing five cars is $250,000. a. What is the average total cost of producing five cars? b. What is the narginal cost of the fifth car? c. Draw the marginal- cost curve and the average-total-cost curve for a typical firm and explain why these curves cross where they do.arrow_forward
- List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. The cost of fuel used in its planes. The rent on its Piarco headquarters. 3. The lease payments on its current inventory of jets. 4.The cost of peanuts it serves to passengers. 5.The salary paid to the Chief Executive Officer.arrow_forwardI need the answer as soon as possiblearrow_forwardA 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, $400 for the fifth, $450 for the sixth, and $500 for the seventh. Create a table that shows the company’s 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 AVC curves to illustratearrow_forward
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