Question 2 A. List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. The cost of fuel used in its planes. The rent on its Piarco headquarters. The lease payments on its current inventory of jets. The cost of peanuts it serves to passengers. The salary paid to the Chief Executive Officer. b How is the difference between average total cost and average variable cost impacted by an increase in output?

Question 2 A. List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. The cost of fuel used in its planes. The rent on its Piarco headquarters. The lease payments on its current inventory of jets. The cost of peanuts it serves to passengers. The salary paid to the Chief Executive Officer. b How is the difference between average total cost and average variable cost impacted by an increase in output?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3CQQ

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What is a long-run average cost curve?
Output Average Cost( at that output level) Marginal Cost of that Car 9,999 $ 12,000 10,000 $ 14,000 $ 11,500 19,999 ? $ 12,500 20,000 ? $ 12,600 Will the Average Cost of 20,000 cars be greater than the Average Cost of 19,999 cars, less than the Average Cost of 19,999 cars, or can you not tell with the information given? ( Hint: it might help to draw a graph of AC and MC, and see if you can place units 19,999 and 20,000 on that graph). O Greater Than Less Than O Can't Tell with the information given
Question 4 Use the following table for the (i),(ii) and (iii) questions. Quantity Total fixed cost Total variable cost 0 $800 $0 1 $800 $50 2 $800 $100 3 $800 $150 4 $800 $200 (i) What is the marginal cost of the third unit? A: $0 B: $50 C: $150 D: $250 (ii) What is the average total cost at the quantity of 4? A: $100 B: $150 C: $200 D: $250 (iii) From the information in the table above, is the marginal product diminishing? A: Yes, because the total cost is increasing as the quantity increases. B: Yes, because the total variable cost is increasing as the quantity increases. C: No, because the marginal cost is not increasing as quantity increases. D: No, because the total fixed cost is not increasing as quantity increases.
1. Suppose marginal cost and average cost are given by the following expressions: MC(x)=3x1/2, AC(x)=2x1/2. What is the profit maximising quantity when p=$3?2. Suppose marginal cost and average cost are given by the following expressions: MC(x)=3x1/2, AC(x)=2x1/2. What is the value pf the long-run break-even price?3. For any given level of the price of output, the supply curve of a producer tells the producer the amount of output to produce in order to maximise profits a. True b. False
2. A company's total cost function as TC = 4,900 + 12Q+4Q Derive the following equations and compute their respective values when Q = 35 a. Average Total Cost (ATC): b. Average Variable Cost (AVC): C. Average Fixed Cost (AFC): d. Marginal Cost (MC):
1. The firm's fixed costs are $2,000, and the firm's total costs of producing 100 units is $4,000. a. What are the variable costs of producing 100 units? (1) b. Write out the total cost equation assuming variable costs are linear. That may sound hard, but it is just the equation for total costs as a function of output. (1) What is the marginal cost of the 50th unit of output? (1) c. d. What is the average total cost of the 50th unit of output? (1) e. What is the average variable cost of the 50th unit of output? (1) f. Graph the AVC, AFC, ATC, and the MC. Make sure you label everything. (2)
image 1 : the following average-total-cost schedule: Quantity Average Total Cost (Number of players) (Dollars) 600 300 601 301 Your current level of production is 600 devices, all of which have been sold. Someone calls, desperate to buy one of your music players. The caller offers you $550 for it. You ( should , or should not ) ? accept the offer. image 2 : Quantity Total Cost Variable Cost (Dozens of pizzas) (Dollars) (Dollars) 0 280 0 1 320 40 2 350 70 3 380 100 4 420 140 5 470 190 6 530 250 The pizzeria's fixed cost is ? .
2. You are the manager of production at a firm that sells high performance road bikes. Your firm has the following average-total-cost schedule: Quantity 548 Bikes 549 Bikes Average Cost $245 $246 Your current level of production is 548 bikes, all of which have been sold. Someone calls desperate to buy a bike for a local race. The caller offers $800 for the bike. Should you accept the offer? Why or why not? Show your calculations for full credit.
PROBLEM 2. Answer the questions below on the basis of the diagram. $10 MC ATC 9 AVC 7 3 2 1 1 2 3 4 6. 7 8 9 10 Quantity (in 1,000s) (a) How can you tell if these cost curves are for the short run or the long run? (b) What does the graph indicate about: (1) AVC at 6000 units of output? (2) ATC at 6000 units of output? (3) AFC at 6000 units of output? (4) TVC at 6000 units of output? (5) TFC at all levels of output? (6) TC at 10,000 units of output? (7) When diminishing returns set in? Cost per unit
1. Explain the difference between an implicit cost and an explicit cost, and how both costs relate to economic and accounting profits. 2. Explain the concept of diminishing marginal product with a graph. 3. What is the difference between average variable cost and average total cost? Please explain each of the cost concepts with graph(s). 4. Explain the relationship between the marginal cost curve and the average cost curve. Draw both of the cost curves to reflect the relationship. 5. Explain economies of scale and diseconomies of scale for a firm with graph(s).
1.Explain how the marginal product of labor and marginal cost are related? Draw one graph for MPL (quantity of workers on x axis) and another for MC (quantity of output on x axis) that displays this relationship. 2. Explain what happens to average total costs when marginal cost is greater than average total costs? 3.Draw a precise graph that shows the following short-run cost curves: MC and ATC 4.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). 5.Bonus: What happens to the difference between ATC and AVC as quantity increases? Why?
14. Explain which of the following is a fixed cost or a variable cost for Southwest Airlines. a. The cost of jet fuel used in its airplanes. b. The monthly rent on its Dallas, Texas headquarters. c. The yearly lease payments on its current inventory of Boeing 737 jets. d. The cost of peanuts it serves to passengers. e. The salary paid to Laura Wright, Southwest's Senior Vice President of Finance and Chief Financial Officer. f. The gate rental fees it pays to McCarran International Airport in Las Vegas, Nevada.