The money that a firm spends on rent is an example of an implicit cost. A firm's explicit costs are always larger than its implicit costs. Answer Bank Implicit costs are related to a firm's opportunity costs. A firm's economic profit can be different from its accounting profi Economic profit and accounting profit both make use of explicit costs.

The money that a firm spends on rent is an example of an implicit cost. A firm's explicit costs are always larger than its implicit costs. Answer Bank Implicit costs are related to a firm's opportunity costs. A firm's economic profit can be different from its accounting profi Economic profit and accounting profit both make use of explicit costs.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 9SQP

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A special shoe manufacturer ABC Co. has costs of production as follows and solve all the subparts: Quantity 0 1 2 3 4 5 6 Total Variable Cost ($) 0 50 70 90 140 200 360 ABC Co.’s fixed costs are $100. Calculate average fixed costs, average variable costs, average total costs and marginal costs at each level of production. Draw the company’s cost curves in a clearly labelled graph. The price of ABC shoe is $50. What are the company’s profits? In case of loss, should the CEO continue operations or decide to shut-down? Which would be a wise decision? Explain. The chief financial officer tells the CEO that it’s better to produce only one shoe this month. What could be the reason for this advice by the CFO? What are the firm’s profits at that level of production? Is this the best decision? Explain.
A special shoe manufacturer ABC Co. has costs of production as follows and solve all the subparts: Quantity 0 1 2 3 4 5 6 Total Variable Cost ($) 0 50 70 90 140 200 360 a. ABC Co.’s fixed costs are $100. Calculate average fixed costs, average variable costs, average total costs and marginal costs at each level of production. b. Draw the company’s cost curves in a clearly labelled graph. c. The price of ABC shoe is $50. What are the company’s profits? In case of loss, should the CEO continue operations or decide to shut-down? Which would be a wise decision? Explain. d. The chief financial officer tells the CEO that it’s better to produce only one shoe this month. What could be the reason for this advice by the CFO? What are the firm’s profits at that level of production? Is this the best decision? Explain.
Question 4Charlie Co. sells pastries and its production and cost table is given below. A worker costs $100 a day, the firm has fixed costs of $200.L Q MP MC TC ATC0 01 202 503 904 1205 1406 1507 155a. Complete the table above b. Compare the average total cost and the marginal cost and explain therelationship c. Describe the methods that can be used to determine where profit is maximized?
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A special shoe manufacturer ABC Co. has costs of production as follows : Quantity 0 1 2 3 4 5 6 Total Variable Cost ($) 0 50 70 90 140 200 360 a. ABC Co.’s fixed costs are $100. Calculate average fixed costs, average variable costs, average total costs and marginal costs at each level of production.
Consider the following cost information for apizzeria:Quantity Total Cost Variable Cost0 dozen pizzas $300 $ 01 350 502 390 903 420 1204 450 1505 490 1906 540 240a. What is the pizzeria’s fixed cost?b. Construct a table in which you calculate themarginal cost per dozen pizzas using theinformation on total cost. Also, calculate themarginal cost per dozen pizzas using theinformation on variable cost. What is therelationship between these sets of numbers?Explain.
A computer company produces affordable, easyto-use home computer systems and has fixed costs of$250. The marginal cost of producing computers is $700for the first computer, $250 for the second, $300 for thethird, $350 for the fourth, $400 for the fifth, $450 for thesixth, and $500 for the seventh.a. Create a table that shows the company’s output,total cost, marginal cost, average cost, variablecost, and average variable cost.b. At what price is the zero-profit point? At whatprice is the shutdown point?c. If the company sells the computers for $500, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.d. If the firm sells the computers for $300, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.
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a. Calculate marginal cost using the formula given in the chapter: ATotal cost/AQuantity. Quantity Variable cost ($) Total cost ($) Marginal cost ($) 0 0 100 1 60 160 2 110 210 100 3 180 280 100 4 270 370 100 5 400 500 100 b. Calculate AVariable cost/AQuantity. Quantity Variable cost ($) AVariable cost Total cost ($) ($)/ AQuantity 0 0 100 1 60 160 100 2 110 210 100 3 180 280 100 4 270 370 100 5 400 500 100
Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows the company’s total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 0 120 — — 1 200 2 240 3 285 4 340 5 425 6 540
LUSC Method of producing that output The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,000. Fixed cost is $120,000. None of these options are correct. APMP 100 80 AO MP 160 40 140 120 100 20 80 60 Labor 40 20 When the firm uses 60 units of labor, what is average total cost at this output? otal th ear- edule and erstanding of on between AVC ie mns 1 and 2 of Table 8.7. The r- n column 3 of Table 8.8. The rela- ws: Consider the 100 units of output riable cost of using 4 workers is found workers employed: ict to 0x4 ise DO00000000 Jog jopipaidjen Bue u pie abes ad
Consider the following cost information for a pizzeria:Quantity Total Cost Variable Cost0 dozen pizzas $300 $0I 350 502 390 903 420 1204 450 1505 490 1906 540 240a. What is the pizzeria's fixed cost?b. Construct a table in which you calculatethe marginal cost per dozen pizzas using theinformation on total cost. Also, calculate themarginal cost per dozen pizzas using the inforpmation on variable cost. What is the relationshipbetween these sets of numbers? Explain.