EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
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Question
Chapter 8, Problem 6TY
To determine
Cost schedule of the firm.
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A firm’s total cost is $1,000 if it produces one unit, $1,600 if it produces two units, and $2,000 if it produces three units of output. Draw up a table of total, average, and marginal costs for this firm.
A manufacturing firm has a total cost curve : TC= 0.25Q^3 - 6Q^2 + 50Q + 240, and a marginal cost curve of MC = 0.75Q^2 -12Q + 50. Calculate the minimum cost that the firm can possibly have.
The table shows a firm's total and marginal
costs.
Output Total cost ($) Marginal cost ($)
1 200 20
2 215 15
3 225 10
4 240 15
5 260 20
Calculate the Average Fixed Cost (AFC) of
producing 6 units of output.
Chapter 8 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- Please answer the following question based on Exhibit 11. Exhibit 11- Cost schedule for a firm Quantity Total Cost Marginal Cost 0 $ 200 1 900 2 $900 3 3,000 a) In Exhibit 11, by filling in the blanks it can be determined that the fixed costs are: b) In Exhibit 11, by filling in the blanks it can be determined that the total cost of the second unit of output is: c) In Exhibit 11, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:arrow_forwardWhen a firm produces one unit, the variable cost is $8. When the firm produces two units, the variable cost is $16. What is the marginal cost of producing the second unit? $8 $4 $24 $2arrow_forwardA manufacturing firm has a total cost curve: TC = 0.2Q3 - 5Q2 + 50Q + 240, and a marginal cost curve of MC = 0.6Q2 - 10Q + 50. Calculate the minimum cost that the firm can possibly have. a.420 ≤ MC < 440 b.MC < 380 c.400 ≤ MC < 420 d.380 ≤ MC < 400 e.MC ≥ 440arrow_forward
- Suppose you own an acre of land. You could grow crops on that land. The cost of seeds is $100. The crops you grow from those seeds will sell for $350. You could also rent the land to another farmer. The rent you could eam is $300. Calculate your economic profit. (Do not include a $ sign in your answer.) Answer: Suppose the total cost function for a firm is given by: TC= 100 + 2q +0.5q2. Find the marginal cost function and then use that to determine the marginal cost of the 10th unit. (Do not include a $ sign in your response.) # Answer:arrow_forwardIn the short run the marginal cost of the first unit of output is $20, the marginal cost of the second unit of output is $16, and the marginal cost of the third unit of output is $14. The firm's total cost of producing three units of output isarrow_forwardWhen a firm produces one unit, the variable cost is $3. When the firm produces two units, the variable cost is $6. What is the marginal cost associated with two units of production.arrow_forward
- Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable. Which of the following costs are most likely to be considered fixed costs? the cost of mustard the cost of hotdog buns the cost of wages paid to workers that sell hotdogs the cost of his vending permitarrow_forwardThe following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 d) Is the price $8 a short-run or long-run equilibrium price for the industry? If the price is not a long run equilibrium price, what adjustments are likely to happen in the market for it to reach long run equilibrium. e) What price must prevail in the market for a typical firm to operate in the short run? At this price, how many ice tea will be supplied by all firms in the market?arrow_forwardThe following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 a) At the price of $2.20 per ice tea, what is the firm’s profit maximizing level of output? Why is this the profit maximizing level of output for the firm? b) If the market price is $8 per ice tea and the firm is producing six (6) ice tea per hour, is the firm maximizing profit or not? Why or why not? If the firm is not maximizing profit, what should it do to maximize profit? c) At the price of $8 per ice tea, what is the firm’s profit-maximizing level of output? Why is this the profit maximizing level of output? What is the firm’s economic profit at…arrow_forward
- TC=q^2+3q+1arrow_forwardThe marginal cost curve of a firm is MC = 6y + y2 . Total variable costs to produce 10 units of output arearrow_forwardThe figure below displays the short-run marginal cost and short-run average cost curves for a firm. When q = 2 and q = 5, the short-run marginal cost is $3. When q = 5, the short-run average cost is $5. Assume the firm has a fixed cost of $11 and they can sell each unit of output at a price of $3 (p = 3). In the short-run, what is the maximum profit this firm can earn? $ 5 3 2 5 MC AC q 6000 8arrow_forward
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