Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5,000 bags of potato chips at the same total cost. Which of the following statements is true? Hint: If the level of output changes, only the variable costs will change. a.If both produce more, Kyle's costs will exceed Stan's costs. b.If both produce less, their costs will still be equal. c.If both produce more, their costs will still be equal. d.If both produce less, Kyle's costs will exceed Stan's costs.
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- In 1796, Gottfried Christoph Härtel, a German music publisher, calculated the cost of printing music using an engraved plate technology and used these estimated cost functions to make production decisions. Härtel figured that the fixed cost of printing a musical page—the cost of engraving the plates—was 900 pfennings. The marginal cost of each additional copy of the page is 5 pfennings (Scherer 2001). a. Graph the total cost, average total cost, average variable cost, and marginal cost functions. b. Is there a cost advantage to having only one music publisher print a given composition? Why? c. Härtel used his data to do the following type of analysis. Suppose he expects to sell exactly 300 copies of a composition at 15 pfennings per page of the composition. What is the greatest amount the publisher is willing to pay the composer per page of the composition?The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner. Cheeseburger Production Costs Quantity(burgers per hour) Average Variable Cost (dollars) Average Total Cost (dollars) Marginal Cost (dollars) 0 — — — 10 $1.00 $6.60 $1.00 20 0.70 3.50 0.40 30 0.70 2.57 0.70 40 0.78 2.18 1.00 50 0.88 2.00 1.30 60 1.07 2.00 2.00 70 1.34 2.14 3.00 80 1.74 2.44 4.50 90 2.23 2.86 6.20 100 2.81 3.37 8.00 a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum . b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .What are Megan’s fixed costs? Given the nature of sidewalk shoveling production, why does Megan’s marginal cost curve look like it does in your graph? Suppose the market price for shoveling a sidewalk is $20 per sidewalk. How many sidewalks will Megan shovel each day to maximize profit? Suppose the market price of shoveling a sidewalk rises to $25 because it has been a snowy winter. How many sidewalks will Megan shovel each day to maximize profit?
- Three college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the stu- dent recreation center, which pay $6,000 per year. A fully equipped facility can be leased at a cost of $8,000 per year. Additional costs are $1,000 a year a. What are fixed costs?b. What are variable costs? c. What is the marginal cost?Melody owns and runs a hot yoga studio. Assume that Melody has no fixed costs and that her only costs of production are the instructors she hires to teach classes. Melody's output is measured in terms of the number of students who take classes in a given week. When Melody hires one instructor, the studio's output is 400 students. When Melody hires two instructors, the studio's output is 600 students, and when Melody hires three instructors, the studio's output is 700 students. The average total cost when Melody hires two instructors is $10. What is the total cost when Melody hires two instructorsIn 1796, Gottfried Christoph Hartel, a German music publisher, calculated the cost of printing music using an engraved plate technology and used these estimated cost functions to make production decisions. Hartel figured that the fixed cost of printing a musical page-the cost of engraving the plates-was 900 pfennigs. The marginal cost of each additional copy of the page was 5 pfennigs (Scherer, 2001). Graph the average total cost, average variable cost, and marginal cost functions. 1.) Using the three-point curved line drawing tool, plot the average cost curve. Let the three points correspond to quantities of 20, 60, and 180 units of output. Label this curve 'AC.' 2.) Using the line drawing tool, draw the marginal cost curve. Label this curve 'MC.' 3.) Using the line drawing tool, plot the average variable cost curve. Label this curve 'AVC.' Carefully follow the instructions above, and only draw the required objects. CH pfennigs, cost per page 50- 45- 40- 35- 30- 25- 20- 15- 10- 01 5-…
- The following table shows data for quantity (Q), variable cost (VC), and fixed cost (FC) for a ski company. a) Fill the table for total cost (TC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC). Make sure to show your work for at least one line. Q VC FC TC ATC AVC MC 30 1 10 30 25 30 3 45 30 4 70 30 100 30 6 135 30 b) Now suppose the firm decides to produce a quantity of 5 units (Q=5), and it sells for a price of $25 each. Answer the following: 1. Calculate the company's profits or losses 2. How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? 3. At the given quantity and price, is the marginal unit produced adding or subtracting to profits? Should the fırm produce at this level of output?Consider the production of hotdogs. The average total cost and average variable cost of producing hotdogs are illustrated in the graph to the right. ATC Use the four-point curve drawing tool to graph the marginal cost of producing hotdogs. Properly label this curve. AVC Q Tip: You will plot 4 control points to draw this curve-two end points and two interior points. Once you draw the curve, you can click on it and move the individual points to modify the shape. Carefully follow the instructions above, and only draw the required objects. Quantity of hotdogs Cost (dollars per unit)Suppose the imaginary company of Roobek is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand’s total cost of production at several different 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 60 — — 1 160 2 220 3 270 4 340 5 450 6 630 On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC…
- We expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. Why?Note: You need to show all your calculations within the table. Q1. Pizzas sell for $13 each. Pat’s cost of producing pizzas is given below. Complete the table: Output (pizzas per hour) Total Cost (dollars per hour) Fixed Cost (1) Variable Cost (2) Average Cost (3) Average Fixed Cost (4) Average Variable Cost (5) Marginal Cost (6) Total Revenue (7) Marginal Revenue (8) 0 10 1 21 2 30 3 41 4 54 5 69 Write down the formulas for all the calculations in the table above, from columns 1 – 8:A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $20 per unit, what is the break even amount of units for technology A? A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $20 per unit, what is the break even amount of units for technology A? a. 70 b. 60 c. 50 d. None - They would have to shut down