production as follows: Quantity Total Fixed cost Total Variable Cost 0 200 0 1 200 50 2 200 70 3 200 90 4 200 140 5 200 200 6 200 360 a. Calculate the company’s average fixed costs, average variable costs, average total costs, and marginal costs. a. The price of a case of ball bearings is $50. Seeing that she can’t make a profit, the chief executive officer (CEO) decides to shut down operations. What are the firm’s profits/losses? Was this a wise decision? Explain. b. Vaguely remembering his introductory economics
Ball Bearings Inc. faces costs of production as follows:
Quantity Total Fixed cost Total Variable Cost
0 200 0
1 200 50
2 200 70
3 200 90
4 200 140
5 200 200
6 200 360
a. Calculate the company’s average fixed costs,
marginal costs.
a. The price of a case of ball bearings is $50. Seeing that she can’t make a profit, the chief
executive officer (CEO) decides to shut down operations. What are the firm’s
Was this a wise decision? Explain.
b. Vaguely remembering his introductory economics course, the chief financial officer tells the CEO
it is better to produce one case of ball bearings because marginal revenue equals marginal cost
at that quantity. What are the firm’s profits/losses at that level of production? Was this the best
decision? Explain.
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