Question

12. Let TC = 10 + Q.MC equals ____.

13. Let the TC curve be given by the equation TC = 5 + 8Q. The AVC curve can be expressed as ____.

.I get $500 revenue from the sale of my product each day. I rent the factory that I use for $20 a day. The raw materials of the operation cost $350 a day. I do all the work myself. Recently, a competitor offered me $100 a day to work for him. Both jobs are equally attractive as far as the work is concerned. 14. My accounting profit is _____, 15. My economic profit is _____.

Answer 1

1) Solution: Let TC = 10 + Q. MC equals 1

Explanation: TC = 10+1Q; thus 1 is MC and 10 is FC

2) Solution: Let the TC curve be given by the equation TC = 5 + 8Q. The AVC curve can be expressed as 8.

Solution: 10 is FC and 8 is AVC

3) I get $500 revenue from the sale of my product each day. I rent the factory that I use for $20 a day. The raw materials of the operation cost $350 a day. I do all the work myself. Recently, a competitor offered me $100 a day to work for him. Both jobs are equally attractive as far as the work is concerned.

Solution:

My accounting profit is 130

My economic profit is 30

Working:

Revenue	500
Rent	20
Raw material	350
Accounting profit	130
Opportunity cost	100
Economic profit	30