ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Justify the statement. T/F
Variable cost change with the change in the level of output in a production process.
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- After running a successful pineapple business, Diddy looks for a new business venture. Now he wants to run gold mining business named "Diddy Bling Bling" which produces/sells raw gold. For simplicity, two types of inputs are required to produce raw gold (workers and gold mine). In short- run production, the size of gold mine is fixed while the number or workers can vary. After consulting his business consultant, Diddy computes the following cost table. The quantity of raw gold (kilograms) Averaged Total Cost (gold mine size=small) Averaged Total Cost (gold mine size-medium) Averaged Total Cost (gold mine size-Large) 1 700 1400 1800 2 600 1300 1700 3 500 1200 1600 4 400 1100 1500 5 300 1000 1400 6 400 900 1300 7 500 800 1200 8 610 600 1100 9 700 500 1000 10 800 400 900 11 900 375 800 12 1100 250 700 13 1200 400 600 14 1300 490 500 15 1400 600 400 16 1500 700 350 17 1600 800 300 18 1700 900 350 19 1800 1000 400 20 1900 1100 500 21 2000 1200 600 22 2100 1300 700 Draw Diddy Bling Bling's…arrow_forwardWhen a firm produces one unit, the variable cost is $3. When the firm produces two units, the variable cost is $6. What is the marginal cost associated with two units of production.arrow_forwardWhat is the term for the change in total cost resulting from a one-unit increase in production? average fixed cost opportunity cost average variable cost marginal costarrow_forward
- Average total cost decreases when marginal cost is average total cost. less than greater than equal toarrow_forwardA firm estimates its production function as Q = -2.4 + 20*L -.5*L2 + 30*K -1.00*K2 + 15*F -.3*F2. Total cost is TC = $2*L + $2.5*K + $1.75*F. The firm wishes to produce 400 units of output. Use Excel to find the cost minimizing amounts of L, K and F. How much F (Fuel) should the firm use?arrow_forwardhow Marginal cost been calculated here. {MC=Change in ATC/Change in Q} please explian still not clear!!arrow_forward
- fixed cost is the same at each output level except when no output is produced. when a firm produces no output,there are no fix cost. true or false? explainarrow_forwardAssume quantities need not be integers. Marginal cost is MC(q) = 6 + (9/10) * q. Total cost is TC = 456 at q=5. What is the fixed cost of production?arrow_forwardDistinguish between economies of scale and diseconomies of scale. Give examples of why a firm may experience economies of scale.arrow_forward
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