Consider two firms, A and B, which both produce product X. Total production costs consist of fixed costs and costs that vary directly with output, Q. Total costs for firm A are described by the equation TCA = 40 + 4Q, and for firm B they are described by the equation TCB = 80 + 20. From this information we can deduce that: A firm A can always produce units of output at a lower average total cost than firm B because it has lower fixed costs B marginal cost must fall as Q rises for both firms because fixed costs are spread over a higher volume of output C marginal cost rises as output rises for both firms because total costs rise as Q rises D marginal cost remains constant for both firms as Q rises I do not want to answer this question. F marginal cost is lower for firm A than for firm B

Consider two firms, A and B, which both produce product X. Total production costs consist of fixed costs and costs that vary directly with output, Q. Total costs for firm A are described by the equation TCA = 40 + 4Q, and for firm B they are described by the equation TCB = 80 + 20. From this information we can deduce that: A firm A can always produce units of output at a lower average total cost than firm B because it has lower fixed costs B marginal cost must fall as Q rises for both firms because fixed costs are spread over a higher volume of output C marginal cost rises as output rises for both firms because total costs rise as Q rises D marginal cost remains constant for both firms as Q rises I do not want to answer this question. F marginal cost is lower for firm A than for firm B

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose w= 1 and r= 3. Solve the cost minimization problem to find L*(q) and K*(q). Then find the cost function C(q).
Consider the table below that describes the costs associated with producing a good (Q). Q Total Variable Cost Total Cost 0 0 30 1 30 60 2 50 80 3 65 95 4 77 107 5 87 117 6 100 130 7 120 150 8 160 190 9 220 250 10 300 330 What is the value of the average total cost when Q=2? Enter your answer as a number below. Do not include a "$" sign.
The following table shows the capital and labor requirements for 10 different levels of production. Assuming that the price of labor (PL) is $9 per unit and the price of capital (PK) is $8 per unit, compute and graph total cost, marginal cost, and average cost for the firm. To do this, fill in the total cost for each output level in the table below. (Enter your responses as whole numbers.) q 0 1 2 3 4 5 6 7 8 9 10 K 0 20 20 20 20 20 20 20 20 20 20 L 0 3 7 10 13 17 23 31 41 53 67 TC 0
In a fishery the long-run harvest function (harvest volume) is H(E) = aE – bE?, with a, b representing positive constants and E is fishing effort. Total cost is TC(E)= cE,with c being the unit cost of effort. Total revenue is TR(E) = pH(E), with p being the constant price of fish. Explain why higher levels of effort (E) beyond a certain point are associated with reductions in long-run total revenue (TR). Explain why it generally is not efficiency- maximizing for society to supply the level of fishing effort that maximizes the sustainable yield.
A firm’s production is represented by the following function: Q = L1/4 K3/4 . The rental rate of capital (r) is $40 and the wage rate (w) is $12.a. For a given level of output, what should be the ratio of capital to labor in order to minimize costs?b. How much capital and labor should be used to produce 400 units of output? What is the total cost?c. What is the short run total cost if output is decreased to 300 units?d. How would the capital labor choice and total cost change in the long run?e. Would the firm prefer to relocate if input prices are r = 60 and w = 8 at an alternativelocation assuming relocation is costless?
Problem 7. A factory that you are managing has an hourly production process that can be represented by the following Cobb Douglas Production function: Q 20KL The price of one unit of capital per hour is $20 and the price of one unit of labour per hour is $20. You have been instructed to have a total cost of $1,000 or TC $1,000. Find the optimal amount of labour and capital that you will be using, and compute the amount of output..
Question 2: This question refers to a firm's production and profit maximization in the long-run. The firm's cost function is: TC = 20E + 100K. 2.a) In the graph below, plot the firm's isocost line representing total costs of $120,000. Indicate on the figure the value of the isocost's slope. Also indicate where the isocost line intersects with the horizontal and the vertical axes. K E 2.b) The firm is considering producing a total of 200 units. If the firm wants to minimize the cost of producing this level of output, what must the marginal rate of technical substitution be?
The following equation represents the cost structure of a firm: C= 10 + 3q. The average cost of production is
An economist estimated that the cost function of a single-product firm isC(Q) = 100 + 20Q + 15 Q^2 + 10 Q^3Based on this information, determine:b. The variable cost of producing 10 units of output.
A firm has the following Cobb-Douglas production function: q=(L^α)(K^1-α)0<α < 1 is a parameter. Suppose in the short run K = 1. The rental rate of a unit of K is $10, and the wage rate of a unit of L is $20.(a) Derive the marginal cost of the firm (expressed in terms of α and q).(b) Derive the average variable cost of the firm (expressed in terms of α and q).(c) Derive the cost function of the firm.
Suppose a firm’s total cost curve is TC = 50Q2 + 10Q + 800 and marginal cost is MC = 100Q + 10. Find the output level that minimizes average total cost and average variable cost, respectively.