Calculation of the fixed cost, variable cost, total cost, and average total cost .

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Chapter 11, Problem 11.2.10PA

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Calculation of the fixed cost, variable cost, total cost, and average total cost.

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Jane's Juice Bar has the following cost schedules: In the following table, complete the marginal cost, average variable cost, and average total cost columns. Quantity Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost (Vats of juice) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 0 0 30 1 5 35 2 15 45 3 30 60 4 50 80 5 75 105 6 105 135 On the following graph, use the orange points (square symbol) to plot the marginal-cost curve for Jane's Juice Bar. (Note: Be sure to plot from left to right and to plot between integers. For example, if the marginal cost of increasing production from 1 vat of juice to 2 vats of juice is $5, then you would plot a point at (1.5, 5).) Then use the purple points (diamond symbol) to plot the average-variable cost curve starting at 1 vat of juice, and use the green points…

The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000. When the firm uses 120 units of labor, what is its marginal cost at this output?

A common name for fixed cost is “overhead.” If you divide fixed cost by the quantity of output produced, you get average fixed cost. Supposed fixed cost is $1,000. What does the average fixed cost curve look like? Use your response to explain what “spreading the overhead” means.