Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 10, Problem 4DQ
To determine
The reason for MC cuts
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4. Various measures of cost
Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows the company's total cost of production at various
production quantities.
Fill in the remaining cells of the following table.
Average Variable Cost
(Dollars per pair)
Average Total Cost
(Dollars per pair)
Quantity
Total Cost
Marginal Cost
Fixed Cost
Variable Cost
(Pairs)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
120
1
210
2
270
3
315
4
380
5
475
630
Douglas Fur is a small manufacturer of fake-fur boots in Chicago. The following table shows the company’s total cost of production at various production quantities.
Fill in the remaining cells of the following table.
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 $200, so you should start your ATC curve by placing a green point at (1, 200). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $80, so you should start your MC curve by placing an orange square at (0.5, 80).)
Note: Plot your points in the order in which you would like them connected. Line segments…
4. Various measures of cost
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)
(Dollars)
(Dollars)
0
1
2
3
4
01
5
6
60
160
220
270
340
450
630
000000
Average Variable Cost Average Total Cost
(Dollars per pair)
(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
(AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint:
ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $160, so you should start your ATC curve by
placing a green point at…
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Economics: Principles & Policy
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