Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 14, Problem 5SPPA
To determine
Based on the case study, determine the output level where the
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Jane’s Juice Bar has the following cost schedules:a. Calculate average variable cost, average total cost, and marginal cost for eachquantity.b. Graph all three curves. What is the relationship between the marginal-cost curveand the average-total-cost curve? Between the marginal-cost curve and the averagevariable-cost curve? Explain.
Marcel leases a garage. He must pay $500 every week for his lease regardless of how many cars he fixes. The number of cars he fixes each week depends on how many mechanics he hires. The table below summarizes his cost information.
Instructions: Enter your answers as a whole number.
a. Fill in the missing values for total fixed cost, total variable cost, and total cost in the table below.
Marcel's Production Costs
Output
Total Fixed Cost (dollars)
Total Variable Cost (dollars)
Total Cost (dollars)
0
$500
$0
$500
10
500
500
20
1,000
30
1,500
40
2,500
50
3,000
ane'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
8
38
2
18
48
3
30
60
4
50
80
5
80
110
6
120
150
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…
Chapter 14 Solutions
Foundations of Economics (8th Edition)
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- QUESTION 4 1. Use the table below to Calculate the Specified Values and answer questions: Quantity of meals Total Variable Cost 0 0 10 200 20 300 30 480 40 700 50 1,000 Assume there is a $100 Fixed cost for Kitchen Appliances At what Quantity is Average Total Cost lowest? OA. 10 B. 20 C. 40 OD. 30 Warrow_forwardUse the following table to answer the questions that follow. Total Output Cost TFC TVC AFC AVC ATC MC0 $20 1 $40 2 $60 3 $90 4 $120 5 $180 6 $280 a. Calculate the total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs b. Plot each of the cost curves. c. At what quantity of output does marginal cost equalaverage total cost and average variable cost?arrow_forwardA firm has the following average total cost curves: Quantity ATC11 ATC22 ATC33 ATC44 1 100 150 50 200 2 80 130 45 170 3 60 110 40 140 4 50 90 45 110 5 55 70 60 90 6 85 60 80 70 7 120 75 100 65 In the long run what is the average total cost when five goods are produced? $arrow_forward
- for these two graphs answer the following question what is the fixed cost?arrow_forwardImagine that a pizzeria has a small pizza oven, "Oven 1". In the immediate future, they must use this oven in order to make pizzas. However, in one year's time, they have the option to upgrade to "Oven 2". The table below displays the average total cost of producing a given quantity of pizzas using each oven. | Number of Pizzas Oven 1 Average Total Cost Oven 2 Average Total Cost 100 200 $5 $4 $5 $6 $7 $7 $5.50 $4 $2.50 $4 300 400 500 In the short run, the average total cost of producing 200 pizzas is $ A In the long run, the average total cost of producing 200 pizzas is $ A . In the long run, it makes sense for this particular pizzeria to use Oven A if they plan on producing 200 pizzas.arrow_forwardSlider owns a hamburger restaurant. Slider's minimum average variable cost is $10 at a quantity of 100 hamburgers, and his minimum average total cost is $15 at a quantity of 200 hamburgers. His total fixed cost is $300. Use this information to answer the questions. What is Slider's AVC when he sells 200 hamburgers? Slider's AVC: $ At a quantity of 250 hamburgers, the average total cost curve is increasing. below average variable cost. not able to be calculated from the information given. Or, none of the other answers are correct. decreasing.arrow_forward
- 4. Use the information in the following graph to find the values for the following at an output level of 1000: Cost (per unit) $30 20 15 3. b. C. d. Marginal cost Total cost 1000 Variable cost Fixed cost MC ATC AVC Quantity of outputarrow_forwardSarah's copy shop can use four alternative plants. The figure shows the average total cost curves for Plant 1 (ATG), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATCA). What is Sarah's long-run average cost if the output is 3,000 copies per day? 10 ATC ATC ATC, ATCA 6 10 Quantity (thousands of copies per day) Select one: O a. 3.7 cents per copy 8.5 cents per copy c More information is needed to determine the long-run average cost O d.5.0 cents per copy Average cost (cents per copy)arrow_forwardGraph the following: Average Total Cost curve and Average Variable Cost curve with proper positioningarrow_forward
- You work at Cooper's Millworks, which makes tables, chairs, doors, etc. Here is a partial table showing the costs of making 1, 2, or 3 tables per day. Four values are missing: A, B, C, D. What is the missing value A? Tables Made Daily Marginal Cost 1 250 2 220 3 190 Answer: Total Cost 250 A C Average Cost 250 B Darrow_forward15 3. Jane's Juice Bar has the following cost schedules: Quantity 0 vats of juice $0 1 10 12 25 3 45 4 70 100 135 10 1 12 13 14 15 Variable cost Total cost $30 40 55 75 100 130 165 Calculate average variable cost, average total cost, and marginal cost for each quantity. Put these numbers in the table below. Quantity Average variable cost Average total cost Marginal cost a. b. Graph all three curves (average variable cost, average total cost and marginal cost) using Excel or a piece of grid paper. Attach the graph to this assignment. What is the relationship between the marginal-cost curve and the average total cost curve? Between the marginal cost curve and the average variable cost curve? Explainarrow_forwardIf Farmer Jones plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 3 bushels of wheat. If he plants 2 bags, he gets 5 bushels. If he plants 3 bags, he gets 6 bushels. A bag of seeds costs $100, and seeds are his only cost. Use these data to graph the farmer's production function and total cost curve. Explain their shapes.arrow_forward
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