Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 8, Problem 1.8P
To determine
The changes in the cost
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Suppose that Maria is starting a food ordering and delivery company.
Customers order meals online. Employees prepare the meals and deliver them to customers.
Maintenance of the online platform for ordering meals costs the company $5 per day.
The company also rents space where orders are prepared. Rent costs $50 per day.
To make the deliveries, the business also rents two delivery cars that cost $10 each per day.
The costs of ingredients for preparing different numbers of meals are provided in the table below.
Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders.
She will pay each employee $120 per day.
The first two columns of the table below show how many meals different number of workers can prepare and deliver.
Price per meal
$50
Workers
(Labor L)
0
1
2
3
4
5
6
7
8
9
10
Meals
(Output Q)
ol-
30
42
52
60
67
73
79
85
90
95
MPL
FC
Cost of
ingredients
$10
$75
$100
$121
$138
$152…
Suppose that Maria is starting a food ordering and delivery company.
Customers order meals online. Employees prepare the meals and deliver them to customers.
Maintenance of the online platform for ordering meals costs the company $5 per day.
The company also rents space where orders are prepared. Rent costs $50 per day.
To make the deliveries, the business also rents two delivery cars that cost $10 each per day.
The costs of ingredients for preparing different numbers of meals are provided in the table below.
Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders.
She will pay each employee $120 per day.
The first two columns of the table below show how many meals different number of workers can prepare and deliver.
Price per meal
$50
Workers Meals (Output
(Labor L)
Q)
0
1
2
3
4
5
6
7
8
9
10
MPL
FC
Cost of
ingredients
VC
$10
$75
$100
$121
$138
$152
$165
$177
$189
$199
$210
TC
AFC
0…
Must complete chart and graph MR, MC, ATC, AVC, and where Q indicates max profit.
FOR CHART, FIND:
Mid-point AVG
Quantity
Total Revenue (pxQ)
Fixed costs calculations
Variable costs (wages x workers)
Total Costs (TC)
Total Profit (TR-TC)
AVC (VC/Q)
ATC (TC/Q)
Marginal Revenue (MR) (change in TR/ change in Q)
Marginal Cost (MC) (change TC/ change in Q)
Change in profit (MR-MC)
Chapter 8 Solutions
Principles of Economics (12th Edition)
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