Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 7, Problem 17SQ
To determine
The mareginal cost curve and the
Expert Solution & Answer
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Nokia sells a new budget cell phone. Based on information
provided by the accounting department, the average variable
cost is: AVC = $30 + Q
%3D
The average fixed cost is: AFC = $9,000,000/Q
where Q is the number of phones. The phone sells for $50.
Show your work/thought process:
a. Find the total cost, average cost, and marginal cost
equations.
b. At what level of output is average total cost minimized?
Why the average variable cost (AVC) and average total cost (ATC) curves are U-shaped (decreasing, reaches minimum and then increasing)?
Refer to the graph shown. This set of cost curves Is:
MC
ATC
B
AVC
A
Q*
Output
Multiple Cholce
wrong because the ATC should be below the AVC.
wrong because the marginal cost curve should not Intersect the average total cost curve.
wrong because the marginal cost curve should go through the minimum polnts of the AVC and ATC curves.
correct.
Costs in dollars
Chapter 7 Solutions
Economics For Today
Ch. 7.5 - Prob. 1YTECh. 7 - Prob. 1SQPCh. 7 - Prob. 2SQPCh. 7 - Prob. 3SQPCh. 7 - Prob. 4SQPCh. 7 - Prob. 5SQPCh. 7 - Prob. 6SQPCh. 7 - Prob. 7SQPCh. 7 - Prob. 8SQPCh. 7 - Prob. 9SQP
Ch. 7 - Prob. 10SQPCh. 7 - Prob. 11SQPCh. 7 - Prob. 1SQCh. 7 - Prob. 2SQCh. 7 - Prob. 3SQCh. 7 - Prob. 4SQCh. 7 - Prob. 5SQCh. 7 - Prob. 6SQCh. 7 - Prob. 7SQCh. 7 - Prob. 8SQCh. 7 - Prob. 9SQCh. 7 - Prob. 10SQCh. 7 - Prob. 11SQCh. 7 - Prob. 12SQCh. 7 - Prob. 13SQCh. 7 - Prob. 14SQCh. 7 - Prob. 15SQCh. 7 - Prob. 16SQCh. 7 - Prob. 17SQCh. 7 - Prob. 18SQCh. 7 - Prob. 19SQCh. 7 - Prob. 20SQCh. 7 - Prob. 21SQCh. 7 - Prob. 22SQCh. 7 - Prob. 23SQCh. 7 - Prob. 24SQCh. 7 - Prob. 25SQ
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Similar questions
- Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?" a. average variable cost b. average fixed cost c. marginal cost d. average total costarrow_forwardWhat is the relationship between average variable cost and marginal cost? a) They are always equal b) Marginal cost is always higher than average variable cost c) Marginal cost is always lower than average variable cost d) The relationship varies depending on the production levelarrow_forwardLesson 8 - Costs Question 4arrow_forward
- Average total cost decreases when marginal cost is average total cost. less than greater than equal toarrow_forwardThe total cost equation for producing X widgets is given by TC = $1,000 + $6X. The marginal cost per widget at a production level of 300 units is closest to which of the following? a. $2,800 b. $6 c. $8 d. $4,000.arrow_forwardThe total cost equation for producing X widgets is given by TC = $1,000 + $6X. The variable cost per widget is closest to which of the following? a. $1,000 b. $6 c. $8 d. $4,000.arrow_forward
- What is the term for the change in total cost resulting from a one-unit increase in production? average fixed cost opportunity cost average variable cost marginal costarrow_forwardGraphically show the relationship between the Avg. Variable Cost, Avg. Total Cost, and Marginal Cost curves. What question does the MC curve (along with the MR curve) answer What question does the ATC curve (along with the AR curve) answer? What question does the AVC curve (along with the AR curve) answer?arrow_forwardCost curves. a) Why does the difference between AVC and ATC get smaller as Q increases? b) Why does MC intersect AVC and ATC at their minimum points? c) Explain the difference between the short run and the long run. d) What is meant by “economies of scale”? (Hint: it has to do with long run average cost) e) Give an example of economies of scale and explain.arrow_forward
- Which of the following is always true?A) When marginal costs are less than average total costs, average total costs will be increasing.B) When average fixed costs are falling, marginal costs must be less than average fixed costs.C) When average fixed costs are rising, marginal costs must be greater than average total costs.D) When marginal costs are greater than average total costs, average total costs will be increasing.arrow_forwardhow do you know the total variable is 50 when finding the total fixed cost?arrow_forwardAssume quantities need not be integers. Marginal cost is MC(q) = 3 + (9/10) * q. What is average variable cost at q=100? Enter a number only, no $ sign.arrow_forward
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