6. Ball Bearings Inc. faces costs of production as follows: Quantity 10 1 2 Total Fixed Costs $100 100 100 100 100 100 100 Total Variable Costs $0 50 70 90 140 200 360 a. Calculate the company's average fixed costs, average variable costs, average total costs, and marginal costs. b. The price of a case of ball bearings is $50. Seeing that she can't make a profit, the chief executive officer (CEO) decides to shut down operations. What are the firm's profits/losses? Was this a wise decision? Explain. c. Vaguely remembering his introductory economics course, the chief financial officer tells the CEO it is better to produce 1 case of ball bearings because marginal revenue equals marginal cost at that quantity. What are the firm's profits/losses at that level of production? Was this the best decision? Explain.

6. Ball Bearings Inc. faces costs of production as follows: Quantity 10 1 2 Total Fixed Costs $100 100 100 100 100 100 100 Total Variable Costs $0 50 70 90 140 200 360 a. Calculate the company's average fixed costs, average variable costs, average total costs, and marginal costs. b. The price of a case of ball bearings is $50. Seeing that she can't make a profit, the chief executive officer (CEO) decides to shut down operations. What are the firm's profits/losses? Was this a wise decision? Explain. c. Vaguely remembering his introductory economics course, the chief financial officer tells the CEO it is better to produce 1 case of ball bearings because marginal revenue equals marginal cost at that quantity. What are the firm's profits/losses at that level of production? Was this the best decision? Explain.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 4PA

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