QUESTION 16 Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when 5 units of output are produced, the total cost is 175 dirhams, and the average variable cost is 30 dirhams. What would the average fixed cost be if 10 units were produced? O a. 4 dirhams. O b. 2.5 dirhams. O c. 10 dirhams. O d. 135 dirhams,

QUESTION 16 Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when 5 units of output are produced, the total cost is 175 dirhams, and the average variable cost is 30 dirhams. What would the average fixed cost be if 10 units were produced? O a. 4 dirhams. O b. 2.5 dirhams. O c. 10 dirhams. O d. 135 dirhams,

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: The Cost Of Production

Section: Chapter Questions

Problem 6PA

See similar textbooks

Similar questions

Return to Figure 7.7. What is the marginal gain in output from increasing the number of batters from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns? Figure 7.7 How output Affects Total costs
What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?
What shapes would you generally expect each of the following cost curves to have: fixed costs, variable costs, marginal costs, average total costs, and average variable costs?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
How do we calculate each of the following: marginal cost, average total cost, and average variable cost?
Suppose the cost of machines increases to 55, while the cost of labor stays at 40. How would that affect the total cost of the three methods? Which method should the film choose now?
What is the relationship between marginal product and marginal cost? (Hint: Look at the curves.) Why do you suppose that is? Is this relationship the same in the long run as in the short run?
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.
For LG Company, the total cost of producing 200 refrigerators is R.O 48,000. When the company produced one more refrigerator, the total costs increased to R.O 48,250. What is the marginal cost of production here? a. R.O 200 b. R.O 180 c. R.O 230 d. R.O 250
1.A 15 per cent increase in all inputs leads to only a 5 per cent increase in the output. Are the returns to scale increasing, constant or diminishing? Illustrate your answer2.What is the slope of an iso-cost line equal to and why? Provide mathematical explanation3.“By definition, cost is zero if a firm does not hire any input. Hence cost-minimization essentially means shutting down the operation of the firm.” Do you agree with the statement? Justify you answer by giving an explanation from microeconomic theory.4.What is meant by an expansion path? Illustrate expansion paths for a normal input and an inferior input.