Question 4 i. Discuss the difference between average revenue and marginal revenue. Why are both of these revenue measures important to a profit-maximizing firm? Discuss the law of diminishing returns and how it explains the shape of the short run average cost curve Camille's variable cost, VC, is his wage cost ($80 per worker per day) and his other input costs ($0.50 per cup). ii. iii. a. Complete the following table b. If the firm closes down and produces no output, what will be its total cost? Explain

Question 4 i. Discuss the difference between average revenue and marginal revenue. Why are both of these revenue measures important to a profit-maximizing firm? Discuss the law of diminishing returns and how it explains the shape of the short run average cost curve Camille's variable cost, VC, is his wage cost ($80 per worker per day) and his other input costs ($0.50 per cup). ii. iii. a. Complete the following table b. If the firm closes down and produces no output, what will be its total cost? Explain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. COST RELATIONSHIPS. A firm's total costs can be broken down into fixed costs (e.g., rent) and variable costs (e.g., payroll), so TC = FC + VC. Dividing by quantity converts these to averages, so TC/Q = FC/Q + VC/Q, or ATC = AFC + AVC. The additional cost incurred by producing one additional unit is the marginal cost, so MC = ATC/AQ, where the Greek letter delta (A) means "a change in." Here is a table showing the various costs for a simple firm that sells a product using a building (capital, a fixed input) and workers (labor, a variable input). Assume that the price of labor is 20 and the price of capital is 120. Use these three cost relationships to complete the table. Total Total Average Variable Cost, Сapital, Output, Q Labor, Total Average Fixed Average Total Cost, Marginal Cost, MC Variable K Fixed Cost, TC Cost, Cost, TFC Cost, TVC AVC AFC АТС 1 120 N/A N/A N/A N/A 1 2 1 160 3 1 20 3 6. 1 40
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S 90 70 40 30 50 MC 100 ATC AVC Figure shows a firm's marginal cost, average total cost, and average variable cost curves. When Q = 50, the total cost will be: O A. $2,800. O B. $4,500. O C. $6.300. O D. $2,100.
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7. Problems and Applications Q10 Consider the following table of long-run total costs for three different firms: A B Quantity Firm A Firm B Firm C с 1 2 3 4 5 60 70 80 90 100 11 24 39 56 75 21 34 49 66 85 Indicate whether each firm experiences economies of scale or diseconomies of scale. (Note: If a firm experiences economies of scale in one region and diseconomies of scale in another, make sure to select both columns.) Firm Economies of Scale O O 6 7 110 120 96 119 106 129 0 Diseconomies of Scale
on the long run average cost curve can you mark where this would be on the curve?
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4.
QUESTION 11 Figure: Cost curves for a firm 1Price 19 18 17 16 15 MC 13 12 ATC 1233 6is Quantity Refer to Figure. At the price of $10 per unit, the firm's Total Cost will be Note: If the graph intersections are little off, please take the closet point. O a. $35 O b.$50 C. $33 d. $30
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