ADVANCED ANALYSIS A firm faces the following costs: total cost of capital = $2,50O; price paid for labor = $14 per labor unit; and price paid for raw materials = $4 per raw-material unit. %3D Instructions: In parts a and b, enter your answers for total cost as a whole number. Round your answers for average total cost to 2 decimal places. In part c, enter your answer as a whole number. a. Suppose the firm can produce 6,500 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,500 units of output? TC = $ ATC = $ b. Now assume the firm improves its production process so that it can produce 7,750 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 7,750 units of output? TC = $ ATC = $ c. If units of output can always be sold for $1 each, then by how much does the firm's profit increase after it improves its production process? 2$

ADVANCED ANALYSIS A firm faces the following costs: total cost of capital = $2,50O; price paid for labor = $14 per labor unit; and price paid for raw materials = $4 per raw-material unit. %3D Instructions: In parts a and b, enter your answers for total cost as a whole number. Round your answers for average total cost to 2 decimal places. In part c, enter your answer as a whole number. a. Suppose the firm can produce 6,500 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,500 units of output? TC = $ ATC = $ b. Now assume the firm improves its production process so that it can produce 7,750 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 7,750 units of output? TC = $ ATC = $ c. If units of output can always be sold for $1 each, then by how much does the firm's profit increase after it improves its production process? 2$

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 3.7P

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Similar questions

A common name for fixed cost is overhead. If you divide fixed cost by the quantity of output produced, you get average fixed cost. Supposed fixed cost is 1,000. What does the average fixed cost curve look like? Use your response to explain what spreading the overhead means.
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