AREC 202 Lecture Notes - Lecture 20: Fixed Cost, Perfect Competition, Demand Curve
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Jane's Juice Bar has the following cost schedules:
Quantity | Variable Cost | Total Cost |
0 vats of juice | $ 0 | $ 30 |
1 | 10 | 40 |
2 | 25 | 55 |
3 | 45 | 75 |
4 | 70 | 100 |
5 | 100 | 130 |
6 | 135 | 165 |
a. Calculate average variable cost, average total cost, and marginal cost for each quantity.
b. Graph all three curves. Determine the relationship between the marginal cost curve and the average total cost curve; between the marginal cost curve and the average variable cost curve.
A perfectly competitive firm has leased plants and equipment to produce video game cartridges, which can be sold in unlimited quantities at $21 each. The following describe the associated costs of production:
Rate of output / day | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Total Cost / day | $50 | $55 | $62 | $75 | $96 | $125 | $162 | $203 | $248 |
(a) How much are fixed costs?
Instructions: Enter your responses as a whole number.
$
(b) Compute total revenue for the table below.
Rate of output / day | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Total Revenue | $ | $ | $ | $ | $ | $ | $ | $ | $ |
(c) Compute the average total cost (ATC), marginal cost (MC) and demand curve values for the firm below.
Rate of output / day | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Total Cost / day | $50 | $55 | $62 | $75 | $96 | $125 | $162 | $203 | $248 |
Average Total Cost | --- | $ | $ | $ | $ | $ | $ | $ | $ |
Marginal Cost | --- | $ | $ | $ | $ | $ | $ | $ | $ |
Demand Curve | $ | $ | $ | $ | $ | $ | $ | $ | $ |
(d) What is the profit-maximizing rate of output?
units
(f) What is the size of the loss if production continues?
Instructions: Enter your response as a whole positive number.
$ loss
(g) How much is lost if the firm shuts down?
Instructions: Enter your response as a whole positive number.
$ loss
value:
11.12 points
A perfectly competitive firm has leased plants and equipment to produce video game cartridges, which can be sold in unlimited quantities at $21 each. The following describes the associated costs of production:
Rate of output/day | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Total Cost / day | $50 | $55 | $62 | $75 | $96 | $125 | $162 | $203 | $248 |
(a) How much are fixed costs?
Instructions: Enter your responses as a whole number.
$
(b) Compute total revenue for the table below.
Rate of output/day | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Total Revenue | $ | $ | $ | $ | $ | $ | $ | $ | $ |
(c) Compute the average total cost (ATC), marginal cost (MC) and demand curve values for the firm below.
Rate of output/day | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Total Cost / day | $50 | $55 | $62 | $75 | $96 | $125 | $162 | $203 | $248 |
Average Total Cost | --- | $ | $ | $ | $ | $ | $ | $ | $ |
Marginal Cost | --- | $ | $ | $ | $ | $ | $ | $ | $ |
Demand Curve | $ | $ | $ | $ | $ | $ | $ | $ | $ |
(d) What is the profit-maximizing rate of output?
units
(e) Should the producer stay in business in the short run?
Yes | |
Not enough information | |
No |
(f) What is the size of the loss if production continues?
Instructions: Enter your response as a whole positive number.
$ loss
(g) How much is lost if the firm shuts down?
Instructions: Enter your response as a whole positive number.
$ loss