MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
Question
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Chapter 11, Problem 15QE

(a)

To determine

Determine the average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC).

(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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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.
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