Question 1

Fairweather Construction, Inc., has the following short-run total cost schedule:
 $$\begin{array} { l r r r r r r r r r r r } 
Q & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \
T C & 100 & 106 & 109 & 110 & 112 & 115 & 119 & 124 & 130 & 137 & 145
\end{array}$$ 
(i)What is the firm's average fixed cost when Q = 5?
(ii)What is the firm's average variable cost when Q = 4?
(iii)What is the firm's average total cost when Q = 4?
(iv)
What is the firm's marginal cost when Q = 10?
(v)
At what level of output does the firm begin to experience diminishing returns?

Accepted Answer

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Question 2

Fairview Construction, Inc., has the following short-run total cost schedule:
 $$\begin{array} { l r r r r r r r r r r r } 
Q & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \
T C & 50 & 58 & 62 & 64 & 65 & 67 & 71 & 78 & 88 & 102 & 121
\end{array}$$ 
(i)What is the firm's average fixed cost when Q = 5?
(ii)What is the firm's average variable cost when Q = 7?
(iii)What is the firm's average total cost when Q = 8?
(iv)
What is the firm's marginal cost when Q = 9?
(v)
At what level of output does the firm begin to experience diminishing returns?

Accepted Answer

The answer of Fairview Construction, Inc., has the following short-run...

Question 3

Oceanview Construction, Inc., has the following short-run total cost schedule:
 $$\begin{array} { l r r r r r r r r r r r } 
Q & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \
T C & 75 & 85 & 91 & 94 & 95 & 98 & 104 & 114 & 129 & 151 & 181
\end{array}$$ (i)What is the firm's average fixed cost when Q = 5?
(ii)What is the firm's average variable cost when Q = 4?
(iii)What is the firm's average total cost when Q = 10?
(iv)
What is the firm's marginal cost when Q = 8?
(v)
At what level of output does the firm begin to experience diminishing returns?

Accepted Answer

The answer of Oceanview Construction, Inc., has the following short-run...

Question 4

Farview Construction, Inc., has the following short-run total cost schedule:
 $$\begin{array} { l r r r r r r r r r r r } 
Q & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \
T C & 30 & 38 & 43 & 46 & 48 & 52 & 59 & 70 & 87 & 112 & 147
\end{array}$$ (i)What is the firm's average fixed cost when Q = 10?
(ii)What is the firm's average variable cost when Q = 4?
(iii)What is the firm's average total cost when Q = 7?
(iv)
What is the firm's marginal cost when Q = 9?
(v)
At what level of output does the firm begin to experience diminishing returns?

Accepted Answer

The answer of Farview Construction, Inc., has the following short-run...

Question 5

Tetrangle Manufacturing has fixed costs of $2,160 per day. The firm manufactures bicycle component upgrade kits. The kits have a short-run average variable cost of $48 and are sold for $66 each.
(i)What is the breakeven level of daily output for the firm?
(ii)What is the degree of operating leverage when daily output is Q = 170?

Accepted Answer

The answer of Tetrangle Manufacturing has fixed costs of $2,160...

Question 6

Triangle Manufacturing has fixed costs of $2,000 per week. The firm manufactures tricycle kits. The kits have a short-run average variable cost of $25 and are sold for $35 each.
(i)What is the breakeven level of weekly output for the firm?
(ii)What is the degree of operating leverage when weekly output is Q = 250?

Accepted Answer

The answer of Triangle Manufacturing has fixed costs of $2,000...

Question 7

Bob and Bill are college students. They are trying to decide what to do over the next summer. Bob's father has suggested that they both come and work at his plastics manufacturing company where each will earn $3,600 over the summer. Bill's father, who runs the local farmer's market, suggests that they go to a local resort area and sell fresh fruit and vegetables to tourists. Their markup on the produce would be 25 percent, so each $1.00 of revenue would involve a variable cost of $0.80. In addition to purchasing the produce, they would have to rent a location. The cost to rent a small roadside stand for the summer is $2,400.
(i)How many dollars worth of produce will they have to sell in order to break even in an accounting sense?
(ii)How many dollars worth of produce will they have to sell in order to break even in an economic sense?

Accepted Answer

The answer of Bob and Bill are college students. They...

Question 8

Barb and Cheryl are college students. They are trying to decide what to do over the next summer. Barb's mother has suggested that they both come and work at her plastics manufacturing company where each will earn $5,250 over the summer. Cheryl's mother, who runs the local farmer's market, suggests that they go to a local resort area and sell fresh fruit and vegetables to tourists. Their markup on the produce would be one-third, so each $1.00 of revenue would involve a variable cost of $0.75. In addition to purchasing the produce, they would have to rent a location. The cost to rent a small roadside stand for the summer is $2,500.
(i)How many dollars worth of produce will they have to sell in order to break even in an accounting sense?
(ii)How many dollars worth of produce will they have to sell in order to break even in an economic sense?

Accepted Answer

The answer of Barb and Cheryl are college students. They...

Question 9

Consider a scenario where the firm hires only two inputs, labor and capital. Assume that the price of labor (the wage rate) is $30 and the price of capital (the rental cost of capital) is $10. Also, assume that the current level of output is 200 and the level of employment is 10. What is the average variable cost at this time?

Accepted Answer

The answer of Consider a scenario where the firm hires...

Question 10

Consider a scenario where the firm hires only two inputs, labor and capital. Assume that the price of labor (the wage rate) is $30 and the price of capital (the rental cost of capital) is $10. Also, assume that the current level of output is 200 and the level of employment is 10. In addition, assume that when the firm hires 9 works, its output level is only 190. What is the marginal cost when 10 workers are hired (assume the short-run)?

Accepted Answer

The answer of Consider a scenario where the firm hires...

Question 11

A manager of a firm was given the following table. Compute the average fixed costs (AFC), average variable costs (AVC), average total costs (ATC) and marginal costs (MC) for indicated levels of output.
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Output } & \begin{array} { l } 
\text { Total } \
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Cost }
\end{array} & \text { AFC } & \text { AVC } & \text { ATC } & \text { MC } \
\hline 0 & 0 & 30 & & & & \
\hline 1 & 20 & 50 & & & & \
\hline 2 & 30 & 60 & & & & \
\hline 3 & 48 & 78 & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of A manager of a firm was given...

Question 12

A manager of a firm was given the following table. Compute the average fixed costs (AFC), average variable costs (AVC), average total costs (ATC) and marginal costs (MC) for indicated levels of output.
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Output } & \begin{array} { l } 
\text { Total } \
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Cost }
\end{array} & \text { AFC } & \text { AVC } & \text { ATC } & \text { MC } \
\hline 0 & 0 & 20 & & & & \
\hline 1 & 40 & 60 & & & & \
\hline 2 & 60 & 80 & & & & \
\hline 3 & 90 & 110 & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of A manager of a firm was given...

Question 13

The new firm has entered a business and estimates its learning curve to be $$A C = 100 Q ^ { - 4 }$$ where Q is the cumulative total product. What is the average cost for the 1^st and the 100^th product?

Accepted Answer

The answer of The new firm has entered a business...

Question 14

The new firm has entered a business and estimates its learning curve to be $$A C = 200 Q ^ { - 3 }$$ where Q is the cumulative total product. What is the difference between average cost of the 100^th and the 10^st product?

Accepted Answer

The answer of The new firm has entered a business...

Question 15

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function $$T V C = 20 Q - 2 Q ^ { 2 } + Q ^ { 3 }$$ , fixed cost , and the price of the product , find the profit maximizing level of output.

Accepted Answer

The answer of A firm manager needs to decide on...

Question 16

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function TVC=30Q-Q^²+Q^³, fixed cost FC=100, and the price of the product P=200, find the profit maximizing level of output.

Accepted Answer

The answer of A firm manager needs to decide on...

Question 17

If TC=50+10Q-12Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions.
 At what level of output is the average variable cost the lowest?
 At what level of output is the marginal cost the lowest?

Accepted Answer

The answer of If TC=50+10Q-12Q^²+Q^³, find total variable cost, average...

Question 18

If TC=90+5Q-10Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions.
 At what level of output is the average variable cost the lowest?
 At what level of output is the marginal cost the lowest?

Accepted Answer

The answer of If TC=90+5Q-10Q^²+Q^³, find total variable cost, average...

Question 19

If TC=20+10Q-2Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions.
 At what level of output is the average variable cost the lowest?
 At what level of output is the marginal cost the lowest?

Accepted Answer

The answer of If TC=20+10Q-2Q^²+Q^³, find total variable cost, average...

Question 20

Your firm has estimated the total variable cost and total fixed cost functions to be
TVC=-60Q+10Q^²,TFC=500.
 If your firm is selling the product for $300, what is the break-even output?
 At what output does the firm maximize its profits?

Accepted Answer

The answer of Your firm has estimated the total variable...

Quiz 8: Cost Theory and Estimation

The new firm has entered a business and estimates its learning curve to be $A C = 100 Q ^ { - 4 }$ where Q is the cumulative total product. What is the average cost for the 1^st and the 100^th product?

The new firm has entered a business and estimates its learning curve to be $A C = 200 Q ^ { - 3 }$ where Q is the cumulative total product. What is the difference between average cost of the 100^th and the 10^st product?

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function $T V C = 20 Q - 2 Q ^ { 2 } + Q ^ { 3 }$ , fixed cost , and the price of the product , find the profit maximizing level of output.

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function TVC=30Q-Q^²+Q^³, fixed cost FC=100, and the price of the product P=200, find the profit maximizing level of output.

If TC=50+10Q-12Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions. At what level of output is the average variable cost the lowest? At what level of output is the marginal cost the lowest?

If TC=90+5Q-10Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions. At what level of output is the average variable cost the lowest? At what level of output is the marginal cost the lowest?

If TC=20+10Q-2Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions. At what level of output is the average variable cost the lowest? At what level of output is the marginal cost the lowest?

Your firm has estimated the total variable cost and total fixed cost functions to be TVC=-60Q+10Q^²,TFC=500. If your firm is selling the product for $300, what is the break-even output? At what output does the firm maximize its profits?

Quiz 8: Cost Theory and Estimation

The new firm has entered a business and estimates its learning curve to be AC=100Q−4A C = 100 Q ^ { - 4 }AC=100Q−4 where Q is the cumulative total product. What is the average cost for the 1st and the 100th product?

The new firm has entered a business and estimates its learning curve to be AC=200Q−3A C = 200 Q ^ { - 3 }AC=200Q−3 where Q is the cumulative total product. What is the difference between average cost of the 100th and the 10st product?

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function TVC=20Q−2Q2+Q3T V C = 20 Q - 2 Q ^ { 2 } + Q ^ { 3 }TVC=20Q−2Q2+Q3 , fixed cost , and the price of the product , find the profit maximizing level of output.

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function TVC=30Q-Q^²+Q^³, fixed cost FC=100, and the price of the product P=200, find the profit maximizing level of output.

If TC=50+10Q-12Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions. At what level of output is the average variable cost the lowest? At what level of output is the marginal cost the lowest?

If TC=90+5Q-10Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions. At what level of output is the average variable cost the lowest? At what level of output is the marginal cost the lowest?

If TC=20+10Q-2Q^²+Q^³, find total variable cost, average variable cost and marginal cost functions. At what level of output is the average variable cost the lowest? At what level of output is the marginal cost the lowest?

Your firm has estimated the total variable cost and total fixed cost functions to be TVC=-60Q+10Q^²,TFC=500. If your firm is selling the product for $300, what is the break-even output? At what output does the firm maximize its profits?

The new firm has entered a business and estimates its learning curve to be $A C = 100 Q ^ { - 4 }$ where Q is the cumulative total product. What is the average cost for the 1^st and the 100^th product?

The new firm has entered a business and estimates its learning curve to be $A C = 200 Q ^ { - 3 }$ where Q is the cumulative total product. What is the difference between average cost of the 100^th and the 10^st product?

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function $T V C = 20 Q - 2 Q ^ { 2 } + Q ^ { 3 }$ , fixed cost , and the price of the product , find the profit maximizing level of output.