Question

A firm has the following short run total costs, where Q is output and TC is total cost:

Q |
TC |

0 |
$ 200 |

1 |
210 |

2 |
230 |

3 |
260 |

4 |
300 |

5 |
350 |

6 |
410 |

7 |
480 |

8 |
560 |

9 |
650 |

10 |
750 |

11 |
860 |

What is total fixed cost equal to?

What is average total cost at Q = 5?

What is average variable cost at Q = 7?

What is marginal cost at Q = 9?

At Q=9, is the firm operating under increasing or decreasing returns? Why?

Answer #1

Total fixed cost is the cost which is incurred irrespective of whether there has been production or not.

Total fixed cost = $200 which is at Q=0

At Q=5 total cost is $350 hence the average cost = 350 / 5 = $70

At any level the fixed cost remains the same which is $200

At Q=7 total fixed cost is $200 hence the total variable cost = $480 - $200 = $280 and the average variable cost will be $280 / 7 = $40

Marginal cost is the additional cost of producing an additional unit of product.

Total cost at Q=8 is $560 and at Q=9 is $650 hence the marginal cost is $650 - $560 = $90 and the per unit marginal cost is $90 / 9 = $10

Marginal cost at Q=8 is $560 - $480 = $80 and as calculated above Marginal cost at Q=9 is $90. Hence, the firm is operating under increasing returns.

a) Assume a perfectly competitive firm’s total cost (TC) for
different levels of output Q is given by:
Q- a) Assume a perfectly competitive firm’s total cost (TC) for
different levels of output Q is given by:
Q TC
0 50
1 100
2 140
3 170
4 190
5 210
6 230
7 260
8 300
9 350
10 410
At a price of $35 how many units will be produced in the short
run? At this price how...

The following is a table of the total cost (TC) of
producing output Q for a particular firm. Based on this
information, which of the following statements is correct?
Q 10 20 30
40 50 60 70 80 90 100
TC ($) 140 210 265 310
360 420 490
570 660 760
A.The average cost at Q = 40 is $7.
B.The marginal cost at Q = 80 is $9.50.
C.The marginal...

A firm has the following short-run cost schedule: Q=0, TC=$50;
Q=1, TC=$58; Q=2, TC = $62; Q=3, TC=$64; Q=4, TC=$65; Q=5, TC=$67;
Q=6, TC=$71; Q=7, TC=$78; Q=8, TC=$88; Q=9, TC=$102; Q=10, TC=$121
At what level of output does the firm begin to experience
diminishing returns?
a) 7th unit
b) 3rd unit
c) 1st unit
d) 5th unit

Consider a firm with a short run Total Cost (TC) given by TC=200
+ 30Q - 5Q^2 + Q^3.
What is the firm’s fixed cost? What is the firm’s marginal cost?
What is firm's shut down price?

A firm in a perfectly competitive constant cost industry has
total costs in the short run given by: TC = 2q2 + 2q +
72 q ≥ 2
where q is output per day and TC is the total cost per day in
dollars. The firm has fixed costs of $54 (already included in the
TC equation above). The TC equation generates minimum average costs
of $26 (per unit) at q = 6. You are also told that this size...

1. Long run average costs rise as output (q) increases
Select one:
a. Economy of Scale
b. Decreasing Returns to Scale
c. Increasing Returns to Scale
d. Constant Returns to Scale
e. Diseconomy of Scale
2.
A production function where the MRTS is constant at all points.
Isoquants are straight lines.
Select one:
a. Production Function
b. Isoquant
c. Perfect Substitutes Production Function
d. Isocost Line
e. Technology Function
f. Fixed-Proportions Production Function
3.
A production function with L-shaped isoquants...

A firm produces output according to the production function.
Q=sqrt(L*K) The
associated marginal products are MPL = .5*sqrt(K/L) and MPK =
.5*sqrt(L/K)
(a) Does this production function have increasing, decreasing, or
constant marginal
returns to labor?
(b) Does this production function have increasing, decreasing or
constant returns to
scale?
(c) Find the firm's short-run total cost function when K=16. The
price of labor is w and
the price of capital is r.
(d) Find the firm's long-run total cost function...

A perfectly competitive firm in the short run has Total Cost and
Marginal Cost functions given by TC(Q)=9+Q+Q2 and
MC(Q)=1+2Q, respectively. The firm faces a price of P=$17.
Determine the output that the firm will produce and the profit.
Show the solution graphically.

Graph the following table.
Number of Workers
Total Output
0
0
1
20
2
60
3
150
4
260
5
350
6
420
7
455
8
420
9
375
10
300
A. What is the marginal product and average product at each
level of production?
B. Graph marginal product and average product.
C. Label the areas on the graph of increasing marginal
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Use the total cost(TC) schedule that is presented in the the
table below to calculate average total cost, average variable cost,
average fixed cost and marginal cost when output (Q) is equal to
6
Q
TC
0
5
1
7
2
8
3
10
4
14
5
20
6
28
7
38
8
50
9
72

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