ECON 2001.01 Study Guide - Quiz Guide: Marginal Cost, Fixed Cost, Variable Cost

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turquoisegnu128

28 Sep 2018

School

Ohio State University

Department

Economics

Course

ECON 2001.01

Professor

All

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blackbuffalo693 and 67 others unlocked

ECON 2001.01 Full Course Notes

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1. (30 points) consider a profit maximizing firm that manufactures ball point pens in a. Cost cost cost cost ($) ($) ($) ($/pen) ($/pen) ($/pen)___($/pen) We will assume that this firm has a small amount of fixed cost () which it must incur regardless of the level of production. The variable cost, consisting of materials and labor, changes along with production levels. Please fill in the entries in the following cost table: 4. 62: (10 points) show the mc, atc, avc, and afc curves on a graph. Avc and atc. (a hand drawn graph is fine as long as it is legible. ) Hint: note that the marginal cost is shown between two production quantities. You should plot this mc at the midpoint of each quantity range. For example, for the mc between the first two quantities, plot your value at q = 15. 200: (4 points) suppose the market price is . 00.

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Shows the hourly production and Total Cost estimates for a new manufacturing firm wishing to enter the smartphone market. Fill in the blank cells in columns a., b., c., d., and e. on the table by computing the appropriate values. Table 1. Smart cell phones produced in an hour Total Cost (TC) Variable Costs (VC) Average Variable Costs (AVC) Average Total Costs (ATC) Average fixed Cost (AFC) Marginal Cost (MC) a. b. c. d. e. 0 $3,200 n/a n/a n/a n/a 15 $3,525 30 $3,875 45 $4,250 60 $4,650 75 $5,075 90 $5,525 105 $6,725 120 $8,210 135 $9,950

Smart cell phones produced in an hour	Total Cost (TC)	Variable Costs (VC)	Average Variable Costs (AVC)	Average Total Costs (ATC)	Average Fixed Cost (AFC)	Marginal Cost (MC)
		a.	b.	c.	d.	e.
0	$3,200		n/a	n/a	n/a	n/a
15	$3,525
30	$3,875
45	$4,250
60	$4,650
75	$5,075
90	$5,525
105	$6,725
120	$8,210
135	$9,950

violetpig436

Table 1. shows the hourly production and Total Cost estimates for a new manufacturing firm wishing to enter the smart phone market. Fill in the blank cells in columns a., b., c., d., and e. on the table by computing the appropriate values.

			Table 1.
Smart cell phones produced in an hour	Total Cost (TC)	Variable Costs (VC)	Average Variable Costs (AVC)	Average Total Costs (ATC)	Average Fixed Cost (AFC)	Marginal Cost (MC)
		a.	b.	c.	d.	e.
0	$3,200		n/a	n/a	n/a	n/a
15	$3,525
30	$3,875
45	$4,250
60	$4,650
75	$5,075
90	$5,525
105	$6,725
120	$8,210
135	$9,950

Based on your calculations in completing the table in Question 2, what is this manufacturerâs minimum cost output level? Explain your answer.

burgundytermite294

A. Fill in the formula for AFC, AVC, ATC, and MC at the top of the column in the gray section within the table. B. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, and MC in the blue sections of the table.

Output	Total Fixed Cost	Total Variable Cost	Total Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
0			$600
5			900
10			1,150
15			1,350
20			1,600
25			1,900
30			2,275
35			2,725
40			3,375
45			4,225
50			5,325

C. Identify the efficient scale of the firm. Explain your reasoning.

Part II. Consider the values in the following table for the Winsome Widget Factory

Winsome Widget Factory
Output	Long-Run Average Total Cost
0	------------------
5	170
10	110
15	85
20	83
25	78
30	75
35	75
40	80
45	82
50	97

a. Over what output levels do the economics of scale occur? Explain.

b. Over what output levels do constant returns to scale occur? Explain.

c. Over what output levels do diseconomies of scale occur? Explain.

salmonsalmon139

ECON 2001.01 Study Guide - Quiz Guide: Marginal Cost, Fixed Cost, Variable Cost

ECON 2001.01 Full Course Notes

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