Draw a precise graph that shows the following short-run cost curves: MC and ATC Add the following to your graph from 3: AVC & AFC (pay particular attention to i) the starting points of these curves and ii) how these curve change relative to MC and ATC as output quantity increases). What happens to the difference between ATC and AVC as quantity increases? Why?

Draw a precise graph that shows the following short-run cost curves: MC and ATC Add the following to your graph from 3: AVC & AFC (pay particular attention to i) the starting points of these curves and ii) how these curve change relative to MC and ATC as output quantity increases). What happens to the difference between ATC and AVC as quantity increases? Why?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 1DQ

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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?
QUESTION 2 The following graph shows the average variable cost (AVC), average total cost (ATC) and marginal cost (MC) curves of a local restaurant whose signature dish is chicken parmigiana. Use the information from the graph to find the values of the following costs at an output level of 30 plates of chicken parmigiana: MC, AVC, ATC, AFC, VC, TC, and FC. Costs (in $) $5 $2.40 $2.20 0 Figure 12 30 MC ATC AVC Quantity (number of plates of chicken parmigiana)
Use the information in the graph to the right to find the values for the following at an output level of 45. 100- The marginal cost is $ 18 . (Round your response to the nearest dollar.) MC The total cost is $ (Round your response to the nearest dollar.) АТС AVC 43 30 18 45 Quantity of output .... Cost
Use the information about total product (TP), average fixed costs (AFC), average variable costs (AVC), average total costs (ATC), and marginal costs (MC) to fill in the missing spaces in the table to the right: ТР AFC AVC ATC MC 10 120 100 220 80 20 150 90 30 40 90 130 130 40 30 50 24 108 132
b. List and explain which of the following is a fixed cost or a variable cost forCaribbean Airlines. i. The cost of fuel used in its planes.ii. The rent on its Piarco headquarters.iii. The lease payments on its current inventory of jets.iv. The cost of peanuts it serves to passengers.v. The salary paid to the Chief Executive Officer.
a) How do you derive the marginal cost (MC) curve of a firm?b) How are average variable cost (AVC) and marginal cost (MC) curvesrelated? Explain.
Suppose 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)
The graph below illustrates a series of short-run average cost curves, numbered AC, through AC5, which correspond to five different plant sizes, which are the only sizes possible. AC AC 48 AC AC AC, 24 12 280 560 40 1120 1400 1680 1960 Quantity of output a. What is true about output levels 280, 560, 840, 1,120, and 1,400? (Click to select) b. What is the right size of a plant to produce an output of 700? (Click to select) c. Between what plant sizes does the firm experience economies of scale? (Click to select)
Each graph below illustrates three short run cost curves for firms, where ATC is Average Total Cost (aka Average Cost), MC is Marginal Cost, and AVC is Average Variable Cost. Based on what you know about the relationships between these curves, which of the following graph is correct? MC ATC ATC AVC AVC B. MC MC ATC AVC ATC AVC D. MC AVC ATC E. D. OA
In the following table, complete the marginal cost, average variable cost, and average total cost columns. Quantity Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost (Vats of juice) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 30 1 35 15 45 3 30 60 50 80 75 105 105 135 On the following graph, use the orange points (square symbol) to plot the marginal-cost curve for Jane's Juice Bar. (Note: Be sure to plot from left to right and to plot between integers. For example, if the marginal cost of increasing production from 1 vat of juice to 2 vats of juice is $5, then you would plot a point at (1.5, 5).) Then use the purple points (diamond symbol) to plot the average-variable cost curve starting at 1 vat of juice, and use the green points (triangle symbol) to plot the average-total-cost curve also starting at 1 vat of juice. MAAAA
E1 On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol) AVC, plot the pointn on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $90, so you should start your MC curve by placing an orange square at (0.5, 90).)
4. Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in Dallas. The following table shows the company’s total cost of production at various production quantities. IMG 1 On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $155, so you should start your ATC curve by placing a green point at (1, 155). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $95, so you should start your MC curve by placing an orange square at (0.5, 95).) Note: Plot your points in the order in which you would like them connected. Line segments will…