2.9 [Related to the Apply the Concept: “Fixed Costs in the Publishing Industry" D] A Federal Reserve publication notes “Airlines have high fixed costs." What are likely to be the most important fixed costs for an airline? Are airlines likely to have particularly high fixed costs relative to their variable costs compared with, say, an Old Navy clothing store or a Panera Bread restaurant? Briefly explain.

Briefly write the behaviour of Average fixed cost when output increase

Business Week, in an article dealing with management, wrote, "When he took over the furniture factory three years ago ... [the manager] realized almost immediately that it was throwing away at least $100,000 a year worth of wood scrap.  Within a few weeks, he set up a task force of managers and workers to deal with the problem.  And within a few months, they reduced the amount of scrap to $7,000 worth [per year]." Was this necessarily an economically efficient move?  Explain your answer.

Q26

Consider the units of output, TFC, and TVC given in the following table. Units of output Total fixed cost (TFC) Total variable cost (TVC) Total cost Average fixed cost Average variable cost Average total cost Marginal cost 0 150 0           6 150 50           16 150 100           29 150 150           44 150 200           55 150 250           60 150 300             Fill in the columns labeled "Total cost" “average fixed cost” “ average variable cost “ “average total cost, and "marginal cost" Draw a graph of each.

Briefly define the short run and long run supply curve?

Economists define profit a bit differently than in accounting. In addition to explicit costs, we also subtract out implicit costs—what you could have earned from the next best alternative.  For example, suppose that you are making $60,000 as an accountant.  You decide to quit your job and open up your own accounting business.  You end up making a profit of $50,000.  How have you done?  Accountants would call this a profit of $50,000 while economists would say that you just lost $10,000 (relative to what you were making before).  So, economists define profits as being equal to total revenues minus total costs, where costs include the opportunity cost. Suppose that a firm had sales revenue of $1 million last year.  It spent $600,000 on labor, $150,000 on capital, and $200,000 on materials.  Calculate the firm’s accounting profit?  If the firm’s factory sits on land owned by the firm that it could rent for $30,000 per year, calculate economic profits.

Suppose the imaginary company of Panthera is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand's total cost of production at several different quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost (Pairs) (Dollars) (Dollars) о 120 1 210 2 270 3 315 4 380 5 475 6 630 (Dollars) (Dollars) Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair) 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 $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the…

The firm depicted by the graph below is producing q0 level of output. Given its costs, is the firm producing at the profit-maximizing/loss minimizing level of output?  Briefly explain why or why not.

Imagine a small juice producer named " Bilberry Infused Beverages" known for its refreshing beverages. The owner, Louis, keeps track of the production costs. Recently he decided to expand his operations and produce more Juices to meet the increasing demand. Table 15.1 below shows the data he has collected: Complete Table 15.1 below and use the information to answer the question that follows. Table 15:1 Production Costs for Bilberry Infused Beverages Output Total cost Fixed cost Variable cost Marginal Average cost cost Average fixed cost D 30 0 1 10 2 18 3 22 4 56 6 5 64 6 76 7 8 15 15 What is the marginal cost of producing the 8th unit of the good? a) 4 b) 10 12 d) 29