IIT Ball Bearings Inc. faces costs of production as follows: Quantity Total Fixed Cost Total Variable Cost 100 100 100 100 100 100 100 1 50 70 90 140 200 360 3 4 5 (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

IIT Ball Bearings Inc. faces costs of production as follows: Quantity Total Fixed Cost Total Variable Cost 100 100 100 100 100 100 100 1 50 70 90 140 200 360 3 4 5 (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

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 5MC

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