Survey Of Economics
10th Edition
ISBN: 9781337111522
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 6.5, Problem 1YTE
To determine
Cause of falling the profit after years of growth.
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Suppose a hugely successful Web company has used freeconomics, expanded its scale of operations, and spread its long-run costs over larger and larger audiences. However, after years of profits, its continued growth has now caused the company’s profits to fall. Using production costs theory, explain why this situation might be occurring.
Please see attached image for multi-part question. For part B, please show the table set-up for Excel.
In 1796, Gottfried Christoph Hartel, a German music publisher, calculated the cost of printing
music using an engraved plate technology and used these estimated cost functions to make
production decisions. Hartel figured that the fixed cost of printing a musical page-the cost of
engraving the plates-was 900 pfennigs. The marginal cost of each additional copy of the page
was 5 pfennigs (Scherer, 2001).
Graph the average total cost, average variable cost, and marginal cost functions.
1.) Using the three-point curved line drawing tool, plot the average cost curve. Let the three
points correspond to quantities of 20, 60, and 180 units of output. Label this curve 'AC.'
2.) Using the line drawing tool, draw the marginal cost curve. Label this curve 'MC.'
3.) Using the line drawing tool, plot the average variable cost curve. Label this curve 'AVC.'
Carefully follow the instructions above, and only draw the required objects.
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pfennigs, cost per page
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Chapter 6 Solutions
Survey Of Economics
Ch. 6.5 - Prob. 1YTECh. 6 - Prob. 1SQPCh. 6 - Prob. 2SQPCh. 6 - Prob. 3SQPCh. 6 - Prob. 4SQPCh. 6 - Prob. 5SQPCh. 6 - Prob. 6SQPCh. 6 - Prob. 7SQPCh. 6 - Prob. 8SQPCh. 6 - Prob. 9SQP
Ch. 6 - Prob. 10SQPCh. 6 - Prob. 11SQPCh. 6 - Prob. 1SQCh. 6 - Prob. 2SQCh. 6 - Prob. 3SQCh. 6 - Prob. 4SQCh. 6 - Prob. 5SQCh. 6 - Prob. 6SQCh. 6 - Prob. 7SQCh. 6 - Prob. 8SQCh. 6 - Prob. 9SQCh. 6 - Prob. 10SQCh. 6 - Prob. 11SQCh. 6 - Prob. 12SQCh. 6 - Prob. 13SQCh. 6 - Prob. 14SQCh. 6 - Prob. 15SQCh. 6 - Prob. 16SQCh. 6 - Prob. 17SQCh. 6 - Prob. 18SQCh. 6 - Prob. 19SQCh. 6 - Prob. 20SQCh. 6 - Prob. 21SQCh. 6 - Prob. 22SQCh. 6 - Prob. 23SQCh. 6 - Prob. 24SQCh. 6 - Prob. 25SQ
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- Use the cost table below to find the following marginal costs. Output quantity Total variable Total fixed Total cost cost cost 20 80 60 140 40 140 60 200 60 210 60 270 80 300 60 360 100 420 60 480 120 600 60 660 140 840 60 900 What is the marginal cost when output is 20? $ What is the marginal cost when output is 80? $ What is the marginal cost when output is 120? $ |arrow_forwardThe table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner. Cheeseburger Production Costs Quantity(burgers per hour) Average Variable Cost (dollars) Average Total Cost (dollars) Marginal Cost (dollars) 0 — — — 10 $1.00 $6.60 $1.00 20 0.70 3.50 0.40 30 0.70 2.57 0.70 40 0.78 2.18 1.00 50 0.88 2.00 1.30 60 1.07 2.00 2.00 70 1.34 2.14 3.00 80 1.74 2.44 4.50 90 2.23 2.86 6.20 100 2.81 3.37 8.00 a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum . b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .arrow_forwardSuppose Nittany Bakery rents a building for $120 per day, and they can hire workers for $75 per day. The short run labor and output (quantity of scones) information is listed below. Fill in the columns for total cost and marginal cost. (Note: You may need to make columns for fixed cost (FC) and variable cost (VC) on a piece of scrap paper, which will make it easier to find total cost (TC).) Do not enter any dollar signs, and if necessary, round to two decimal places. Short Run Labor, Output, and Costs Labor (L) Output (Q) Total Cost (TC) Marginal Cost (MC) 00 -- 14 212 3 24 440 5 60 675 7 84arrow_forward
- Three college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the stu- dent recreation center, which pay $6,000 per year. A fully equipped facility can be leased at a cost of $8,000 per year. Additional costs are $1,000 a year a. What are fixed costs?b. What are variable costs? c. What is the marginal cost?arrow_forwardWhich of the costs discussed in the chapter is the most important when a firm is deciding how much to produce? Costs that are spent to improve the image of the firm. A firm will choose to increase output if it spends a large amount on advertising and brand image. Fixed costs because these costs are spent and cannot be changed in the time period under consideration. If fixed costs are higher, the firm will choose to produce more output. Variable costs because these costs change as output changes. If the firm wants to maximize profits, it will choose to produce a quantity where variable costs are minimized. Marginal cost because this cost shows the additional cost associated with producing one more unit of output. Firms will use this information to decide to produce more or less output.arrow_forwardSuppose your dad owns a voodworking shop where he makes handmade benches. The following graph shows the marginal cost (MC) and average variable cost (AVC) for your dad's business. 100 90 80 MC 70 60 AVC 50 40 30 20 10 10 20 30 40 50 60 70 80 90 100 OUTPUT (Benohes per month) For each of the prices in the following table, use the graph to determine the number of benches your dad would produce in order to maximize his profit. Also, for each of the prices, indicate whether the firm will produce or shut down (or be indifferent between the two) in the short run. Price Output (Dollars per bench) (Benchs per month) Produce or Shut Down? 32 36 42 55 66 76 COST (D olars per bench)arrow_forward
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