Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 8, Problem 6TY
To determine
Cost schedule of the firm.
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Students have asked these similar questions
A firm’s total cost is $1,000 if it produces one unit, $1,600 if it produces two units, and $2,000 if it produces three units of output. Draw up a table of total, average, and marginal costs for this firm.
The table shows a firm's total and marginal
costs.
Output Total cost ($) Marginal cost ($)
1 200 20
2 215 15
3 225 10
4 240 15
5 260 20
Calculate the Average Fixed Cost (AFC) of
producing 6 units of output.
The table gives some of the costs of the Delicious Pie Company. The marginal cost per pie of increasing the output of pies from 100 to 200 is
Total
variable cost
(dollars)
Output
(pies)
0
100
200
300
400
$8.00
$600
$6.00
$5.00
0
400
1,000
1,800
2,800
Total cost
(dollars)
300
700
1300
2100
3100
?
Chapter 8 Solutions
Economics: Principles & Policy
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- The table shows the marginal cost for a company's product at various production levels. Marginal cost ($/unit) Marginal cost ($/unit) Units Units 3.21 7000 2.14 1000 2.87 8000 2.13 2000 2.78 9000 2.15 3000 2.75 10,000 2.19 4000 2.54 11,000 2.38 5000 2.45 12,000 2.64 6000 2.23 13,000 2.82 (a) Estimate the cost (not including fixed costs) to produce the first 12,000 units by considering batches of 2000 units. Use the initial marginal cost for each batch in your calculations. (b) Use batches of 1000 units and the ending marginal cost for each batch to estimate the cost of raising the production level from 4000 to 11,000 units. $arrow_forwardPlease answer the following question based on Exhibit 11. Exhibit 11- Cost schedule for a firm Quantity Total Cost Marginal Cost 0 $ 200 1 900 2 $900 3 3,000 a) In Exhibit 11, by filling in the blanks it can be determined that the fixed costs are: b) In Exhibit 11, by filling in the blanks it can be determined that the total cost of the second unit of output is: c) In Exhibit 11, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:arrow_forwardA computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. Create a table that shows the company’s output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustratearrow_forward
- A manufacturing firm has a total cost curve: TC = 0.2Q3 - 5Q2 + 50Q + 240, and a marginal cost curve of MC = 0.6Q2 - 10Q + 50. Calculate the minimum cost that the firm can possibly have. a.420 ≤ MC < 440 b.MC < 380 c.400 ≤ MC < 420 d.380 ≤ MC < 400 e.MC ≥ 440arrow_forwardA firm faces the following table of costs for various levels of production, if they can sell their product for Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost Q 0 10 9 2.00 11.00 2.00 30 3.00 1.00 4.00 0.50 45 2.00 1.11 3.11 1.33 55 1.64 1.29 2.93 2.10 If the firm can sell their product for $1.33 they will [Select] short-run and [Select] V in the long run. in thearrow_forwardSuppose you own an acre of land. You could grow crops on that land. The cost of seeds is $100. The crops you grow from those seeds will sell for $350. You could also rent the land to another farmer. The rent you could eam is $300. Calculate your economic profit. (Do not include a $ sign in your answer.) Answer: Suppose the total cost function for a firm is given by: TC= 100 + 2q +0.5q2. Find the marginal cost function and then use that to determine the marginal cost of the 10th unit. (Do not include a $ sign in your response.) # Answer:arrow_forward
- Suppose the firm achieves total revenue of $1,000 by selling 150 units while facing total costs of $900. If the firm produces and sells 151 units, its total revenue is $1,005, and its total costs are $950. Should the firm produce and sell the extra unit? Group of answer choices yes, since marginal profit is positive yes, since profits are positive no, since marginal profit is negative no, since marginal profit is positive You have recently learned that the company where you work is being sold for $1,000,000. The company's income statement indicates next year's profits of $30,000, which have yet to be paid out as dividends. Assuming the company will remain a "going concern" indefinitely and the interest rate will remain constant at 7%, at what (constant) rate does the owner believe that profits will grow? (Hint: the price the owner was willing to pay is the present value of the firm's future cash flows) Group of answer choices 6% 5% 4% 4.5%arrow_forwardThe following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 d) Is the price $8 a short-run or long-run equilibrium price for the industry? If the price is not a long run equilibrium price, what adjustments are likely to happen in the market for it to reach long run equilibrium. e) What price must prevail in the market for a typical firm to operate in the short run? At this price, how many ice tea will be supplied by all firms in the market?arrow_forwardThe following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 a) At the price of $2.20 per ice tea, what is the firm’s profit maximizing level of output? Why is this the profit maximizing level of output for the firm? b) If the market price is $8 per ice tea and the firm is producing six (6) ice tea per hour, is the firm maximizing profit or not? Why or why not? If the firm is not maximizing profit, what should it do to maximize profit? c) At the price of $8 per ice tea, what is the firm’s profit-maximizing level of output? Why is this the profit maximizing level of output? What is the firm’s economic profit at…arrow_forward
- In the short run the marginal cost of the first unit of output is $20, the marginal cost of the second unit of output is $16, and the marginal cost of the third unit of output is $14. The firm's total cost of producing three units of output isarrow_forwardHarry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable. Which of the following costs are most likely to be considered fixed costs? the cost of mustard the cost of hotdog buns the cost of wages paid to workers that sell hotdogs the cost of his vending permitarrow_forwardThe following incomplete table describes the costs faced by a firm as it produces an increasing quantity of output. All costs are in dollars. Many cells are left blank and you may need to fill some of them in to answer the question: Average Average Total Quantity Total Cost Marginal Cost Variable Cost Cost 1 45 10 8 3 59 4 16 In dollars, what is this firm's marginal cost of producing its fourth unit of output?arrow_forward
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