For this Short Run firms costs, explain the SHAPE of each curve: MC, ATCand AVC. Where would the AFC be located and why?MCATCP2AVCP1QI Q2www.economicshelp org

Marginal cost is the additional cost incurred for producing an extra unit of output. Total cost is…

Answered: For this Short Run firms costs, explain…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 6SQP

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How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Draw a graph and complete a short-run cost table by using the information provided. (TP) (TFC) (AFC) (TVC) (AVC) (ATC) (TC) (MC) 0 $ $ $ $ $ $ $ 1 $12 2 $12 $10 3 $12 4 $14
For this Short Run firms costs, explain the SHAPE of each curve: MC, ATC and AVC. Where would the AFC be located and why?
Does the firm can also earn zero profit or even loss where MC=MR? a. maybe b. yes c. sometimes d. no
Make a sketch of Lin’s short-run cost curves
Ball Bearings, Inc. faces costs of production as follows:Table 1: Ball Bearing Inc. Production CostsQuantity Total Fixed Cost Total Variable Cost0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Calculate the company’s average fixed costs, average variable costs, average total costs, and marginal costsat each level of production.(b.) The price of a case of ball bearings is 50. Seeing that she can’t make a profit, the Chief Executive Officer(CEO) decides to shut down operations. What are the firm’s profits/ losses? Was this a wise decision?Explain.(c.) Vaguely remembering his introductory economics course, the Chief Financial Officer tells the CEO it isbetter to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.
Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 360 200 160 240 400 720 2 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Ike’s Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike’s Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using . On the following graph, plot the three SRATC…
Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 360 200 160 240 400 720 2 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Ike’s Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike’s Bikes is expecting to produce 600 bikes per month for several years. In this case, in the long run, it would choose to produce bikes usingone factory . On the following graph, plot…
Draw the MC and the ATC curves and show graphically: (a) The long-run optimal production and price level. (b) The economic profits when p >Min(AT C). (c) The economic profits when p <Min(AT C). (d) The economic profits when p= Min(AT C).
Given the following data about an organization works in the short run: Q TFC TVC TC AFC AVC ATC MC 0       1 11 2 58 3 24 4 6.5 5 135 6 Complete the table
The WipeOut Ski Company manufactures skis for beginners. Fixed costs are $30. Fill in Table 7.16 for total cost, average variable cost, average total cost, and marginal cost., now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of $25 each. a. What will be the company’s profits or losses? b. How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? c. At the given quantity and price, is the marginal unit produced adding to profits?
Explain why firms face different costs in the long run than in theshort run.

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For this Short Run firms costs, explain the SHAPE of each curve: MC, ATC and AVC. Where would the AFC be located and why?