Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 6, Problem 3P
(a)
To determine
Complete the given table and estimate AFC, when 5 widgets are produced.
(b)
To determine
1. Whether the Marginal Cost (MC) of producing
2. Whether the production of
(c)
To determine
ATC for producing
(d)
To determine
MC, when the sixth widget is produced.
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The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner.
Cheeseburger Production Costs
Quantity(burgers per hour)
Average Variable Cost (dollars)
Average Total Cost (dollars)
Marginal Cost (dollars)
0
—
—
—
10
$1.00
$6.60
$1.00
20
0.70
3.50
0.40
30
0.70
2.57
0.70
40
0.78
2.18
1.00
50
0.88
2.00
1.30
60
1.07
2.00
2.00
70
1.34
2.14
3.00
80
1.74
2.44
4.50
90
2.23
2.86
6.20
100
2.81
3.37
8.00
a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum .
b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .
Souvlaki Taverna is one of many restaurants in Athens, Greece which sell Souvlaki kebabs. All restaurants make the dish slightly differently. Use the following graph showing the demand (D), marginal revenue (MR), average variable cost (AVC), average total cost (ATC) and marginal cost (MC) curves of Souvlaki Taverna to answer the questions below.
(a). The goal of Souvlaki Taverna is to maximize its profit. How many Souvlaki kebabs per day should it make? What price per kebab (in euros) should it charge?
If Souvlaki Taverna maximizes its profit, how much is its total revenue? What about its total costs? What is its daily profit? What would the profit-maximizing output level of this business be if it operated in a perfectly competitive market instead? What price per kebab would it charge?
Does the economic outcome in part (a) imply allocative efficiency? Why or why not? Does the economic outcome in part (a) imply productive efficiency? Why or why not?
Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5,000 bags of potato chips at the same total cost. Which of the following statements is true? Hint: If the level of output changes, only the variable costs will change.
a.If both produce more, Kyle's costs will exceed Stan's costs.
b.If both produce less, their costs will still be equal.
c.If both produce more, their costs will still be equal.
d.If both produce less, Kyle's costs will exceed Stan's costs.
Chapter 6 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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