29. As output increases, the slope of the firm's average fixed cost is: first negative and then positive first positive and then negative always negative always positive b)
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- A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.How does fixed cost affect marginal cost? Why is this relationship important?Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?
- Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?The following table shows some of the short run costs for the American Paper Co Fill the blanks in the following table (Hint - Total Fixed Costs remain the same across all levels of output for any firm). Tell me the steps that you took to fill in the blanks. Output (Q) 1 2 3 4 AVC lall 9 TFC AFC 10 10 10 10 10 5 3.33 2.5 ATC 15 | 16 18 TC Legend : AVC - Average Variable Costs; AFC - Average Fixed Costs; ATC - Average Total Costs; TC - Total Costs; MC - Marginal Costs. Our fixed cost is 10 for all of the four outputs MC XXXX OCYou are given the following cost data: Total fixed costs are $60. 9 0 1 2 3 4 5 6 TVC 0 25 40 60 90 130 185 How many units of output will this firm produce at a price of $22 and at a price of $42? What is the total reve- nue and total cost at each price? What is the profit at each price? Briefly explain using the concept of marginal cost.
- 8. A firm's cost curves are given in the following table. TC TFC TVC AVC ATC MC $100 $100 1 130 100 150 100 3 160 100 4 172 100 5 185 100 210 100 240 100 8 280 100 9 330 100 10 390 100 a. Complete the table. b. Graph AVC, ATC, and MC on the same graph. What is the relationship between the MC curve and the ATC and between MC and AVC? c. Suppose market price is $30. How much will the firm produce in the short run? How much are total profits? d. Suppose market price is $50. How much will the firm produce in the short run? What are total profits? IIII IIII I IIII IIII Iconl This Question: 1 pt in M sign Hom e a The graph shows the average variable cost curve and average total cost curve for a firm that produces candles. Draw the firm's marginal cost curve. Label it. When the marginal cost of producing an output exceeds its average variable cost but is less than its average total cost, OA. total variable cost is at its maximum value OB. average variable cost is increasing while average total cost is decreasing OC. average fixed cost is increasing OD. both average variable cost and average total cost are increasing Click the graph, choose a tool in the palette and follow the instructions to create your graph. APR 97 36 7- 6- 5- Cost (dollars per candle) ATC AVC 10 20 15 Output (candles per day) >>> Draw only the objects specified in the question. 25 30100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars)
- QUESTION 7 Consider a coffee shop that can increase the amount of coffee sold by increasing the number of coffee machines. If the coffee seller faces diminishing marginal returns to the coffee machines, she must also face... O Decreasing marginal costs O Decreasing total cost Ⓒ Increasing Marginal Costs Increasing average costs Constant average costsQUESTION 11 Figure: Cost curves for a firm 1Price 19 18 17 16 15 MC 13 12 ATC 1233 6is Quantity Refer to Figure. At the price of $10 per unit, the firm's Total Cost will be Note: If the graph intersections are little off, please take the closet point. O a. $35 O b.$50 C. $33 d. $30You learn that a firm's average total costs (ATC) and average variable costs (AVC) are exactly equal. What does that mean? O Marginal cost is zero O ATC and AVC must be equal to zero O Average fixed costs (AFC) are zero O Economic profit is positive O Economic profit is negative