Homewor Assignment 7


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Homewor Assignment 7 1 answer below » Homework Assignment 7 1. The accompanying table shows a car manufacturer’s total cost of producing cars. Quantity of cars Total Cost 0 $500,000 1 $540,000 2 $560,000 3 $570,000 4 $590,000 5 $620,000 6 $660,000 7 $720,000 8 $800,000 9 $920,000 10 $1,100,000 a. What is this manufacturer’s fixed cost? b. For View complete question » Homework Assignment 7 1. The accompanying table shows a car manufacturer’s total cost of producing cars. Quantity of cars Total Cost 0 $500,000 1 $540,000 2 $560,000 3 $570,000 4 $590,000 5 $620,000 6 $660,000 7 $720,000 8 $800,000 9 $920,000 10 $1,100,000 a. What is this manufacturer’s fixed cost? b. For each level of output except zero output, calculate this manufacturer’s marginal cost ( MC ). c. For each level of output except zero output, calculate the variable cost ( VC ). d. For each level of output except zero output, calculate the average variable cost ( AVC ), e. For each level of output, calculate the average total cost ( ATC ), f. For each level of output except zero output, calculate the average fixed cost ( AFC ). Quantity of cars Total Cost Marginal Cost b. Variable Cost c. Average Variable Cost d. Average Total Cost e. Average Fixed Cost f. 0 $500,000 — — — — — 1 $540,000 2 $560,000 3 $570,000 4 $590,000 5 $620,000 6 $660,000 7 $720,000 8 $800,000 9 $920,000 10 $1,100,000 g. What number of cars is the manufacturer’s minimum cost output level? 2. You produce widgets. Currently you produce 4 widgets at a total cost of $40. a.What is your average total cost? b.Suppose you could produce one more (the fifth) widget at a marginal cost of $5. If you do produce that fifth widget, what will your average total cost be? Has your average total cost increased or decreased? Why? c.Suppose instead that you could produce one more (the fifth) widget at a marginal cost of $20. If you do produce that fifth widget, what will your average total cost be? Has your average total cost increased or decreased? Why? Section 2 The accompanying table shows a boat manufacturer’s total cost of producing boats. Quantity of Boats Total Cost 0 $ 450,000 1 $ 490,000 2 $ 510,000 3 $ 520,000 4 $ 540,000 5 $ 570,000 6 $ 610,000 7 $ 670,000 8 $ 750,000 9 $ 870,000 What is this manufacturer’s fixed cost? 2. For each level of output, calculate the variable cost ( VC ). For each level of output except zero output, calculate the average variable cost ( AVC ), average total cost ( ATC ), and average fixed cost ( AFC ). Qty of boats Total Cost Variable Costs a. Average Variable Costs b. Average Total Costs c. Average Fixed Cost d. 0 $450,000 – – – – 1 490,000 2 510,000 3 520,000 4 540,000 5 570,000 6 610,000 7 670,000 8 750,000 9 870,000 3. What is the minimum-cost output? 4. Joe Brown’s dairy operates in a perfectly competitive marketplace. Joe’s machinery costs $500 per day and is the only fixed input. His variable costs are comprised of the wages paid to the few workers he employs at the dairy and the grain he feeds to his dairy cows. His cost structure is shown on the accompanying table Gallons of Milk FC VC TC MC AVC ATC 0 $500 – $500 – – – 1000 500 $2,100 2,600 $2.10 $2.10 $2.60 2000 500 $2,200 2,700 $0.10 $1.10 $1.35 3000 500 $2,900 3,400 $0.70 $0.97 $1.13 4000 500 $3,680 4,180 $0.78 $0.92 $1.05 5000 500 $5,180 5,680 $1.50 $1.04 $1.14 4. a. What is the break-even price? 4. b. What is the shut-down price? 4. c. If the market price of milk is $1.50 per gallon, will Joe make a profit? Explain. 4. d. If the market price of milk is $1.50 per gallon, should Joe continue to produce in the short run? Explain. 4. e. If the market price of milk is $1.00 per gallon, will Joe make a profit? Explain. 4. f. If the market price of milk is $1.00 per gallon, should Joe continue to produce in the short run? Explain. 4. g. If the market price of milk is $0.75 per gallon, will Joe make a profit? Explain. 4. h. If the market price of milk is $0.75 per gallon, shoul…

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