Ball Bearings, Inc., faces costs of production as follows: Quantity (cases) Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 0 $100 $0 $ 100.00 N/A N/A N/A N/A 1 100 50 $ 150.00 $ 100.00 $ 50.00 $ 150.00 $ 50.00

Ball Bearings, Inc., faces costs of production as follows: Quantity (cases) Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 0 $100 $0 $ 100.00 N/A N/A N/A N/A 1 100 50 $ 150.00 $ 100.00 $ 50.00 $ 150.00 $ 50.00

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

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 4MC

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Question

	Ball Bearings, Inc., faces costs of production as follows:

	Quantity (cases)	Total Fixed Cost	Total Variable Cost	Total Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
	0	$100	$0	$ 100.00	N/A	N/A	N/A	N/A
	1	100	50	$ 150.00	$ 100.00	$ 50.00	$ 150.00	$ 50.00
	2	100	70
	3	100	90
	4	100	140
	5	100	200
	6	100	360

a. Calculate the company’s average fixed cost, average variable cost, average total cost, and marginal cost at each level of production.

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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