3. Suppose you start a new business by fixing car paint scratches. The table following shows all your input costs per year. Table 2. Costs of inputs of your car paint fixing store Cost ($) $50 per unit $30 per unit $25 per unit unit Item Cost ($) 25,000 per year. 50,000 рег уear 5,000 рer year Item Paint (all colors) Clear coating Brush + Sand paper Tapes, paper etc. Garage renting Labor Tax and insurance $15 per The volume of variable inputs (including paint, clear coating, brush, sand paper, tapes, paper and other accessories) in your store depends on the number of cars you fix. As a rule of thumb, you may use up to 200 units of variable inputs per year. (1) From above, how much is your total explicit cost and total economic cost per year if you are self-employed for this store. In other words, you do not need to hire anybody work for you. And you used 200 units of all variable inputs. (2) In case you hire one labor for this store, how much is your total explicit cost and total economic cost per year. And you used 200 units of all variable inputs. (3) In the case when you hire one labor, how much is total fixed cost (FC) per year? And how much is total variable cost (VC) per year with 200 units of variable inputs? (4) Suppose with all the inputs as above, you can fix 500 cars per year. Then, how much is your average fixed cost (AFC), average variable cost (AVC) and average total cost (ATC) in a year.
3. Suppose you start a new business by fixing car paint scratches. The table following shows all your input costs per year. Table 2. Costs of inputs of your car paint fixing store Cost ($) $50 per unit $30 per unit $25 per unit unit Item Cost ($) 25,000 per year. 50,000 рег уear 5,000 рer year Item Paint (all colors) Clear coating Brush + Sand paper Tapes, paper etc. Garage renting Labor Tax and insurance $15 per The volume of variable inputs (including paint, clear coating, brush, sand paper, tapes, paper and other accessories) in your store depends on the number of cars you fix. As a rule of thumb, you may use up to 200 units of variable inputs per year. (1) From above, how much is your total explicit cost and total economic cost per year if you are self-employed for this store. In other words, you do not need to hire anybody work for you. And you used 200 units of all variable inputs. (2) In case you hire one labor for this store, how much is your total explicit cost and total economic cost per year. And you used 200 units of all variable inputs. (3) In the case when you hire one labor, how much is total fixed cost (FC) per year? And how much is total variable cost (VC) per year with 200 units of variable inputs? (4) Suppose with all the inputs as above, you can fix 500 cars per year. Then, how much is your average fixed cost (AFC), average variable cost (AVC) and average total cost (ATC) in a year.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 11RQ: What is die difference between accounting and economic profit?
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Please show me how to work this out. It has four parts but one question
Transcribed Image Text:3. Suppose you start a new business by fixing car paint scratches. The table following shows all
your input costs per year.
Table 2. Costs of inputs of your car paint fixing store
Cost ($)
$50 per unit
$30 per unit
$25 per unit
$15 per unit
Item
Cost ($)
25,000 per year.
50,000 per year
5,000 per year
Item
Paint (all colors)
Clear coating
Brush + Sand paper
Tapes, paper etc.
Garage renting
Labor
Tax and insurance
The volume of variable inputs (including paint, clear coating, brush, sand paper, tapes, paper and
other accessories) in your store depends on the number of cars you fix. As a rule of thumb, you
may use up to 200 units of variable inputs per year.
(1) From above, how much is your total explicit cost and total economic cost per year if you are
self-employed for this store. In other words, you do not need to hire anybody work for you. And
you used 200 units of all variable inputs.
(2) In case you hire one labor for this store, how much is your total explicit cost and total
economic cost per year. And you used 200 units of all variable inputs.
(3) In the case when you hire one labor, how much is total fixed cost (FC) per year? And how
much is total variable cost (VC) per year with 200 units of variable inputs?
(4) Suppose with all the inputs as above, you can fix 500 cars per year. Then, how much is your
average fixed cost (AFC), average variable cost (AVC) and average total cost (ATC) in a year.
4.
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