Suppose you have a job in production management. A portion of your costs are as in the table below: Quantity Average Total Cost JD 250 300 301 JD 251 Your current level of production is 300 units. All 300 units have been ordered by your regular customers. The phone rings. it's a new customer who wants to buy one unit of your product, offering JD 650 for the unit. You would have to increase production to 501 unit. Should you do it? a O Yes i should increase production to 501 unit and earn more profit. O No i shouldn't increase production to 501 unit because i will loose.

Suppose you have a job in production management. A portion of your costs are as in the table below: Quantity Average Total Cost JD 250 300 301 JD 251 Your current level of production is 300 units. All 300 units have been ordered by your regular customers. The phone rings. it's a new customer who wants to buy one unit of your product, offering JD 650 for the unit. You would have to increase production to 501 unit. Should you do it? a O Yes i should increase production to 501 unit and earn more profit. O No i shouldn't increase production to 501 unit because i will loose.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 4CQQ

See similar textbooks

Similar questions

Which costs are measured on per-unit basis: fixed costs, average cost, avenge variable cost, variable costs, and marginal cost?
How does fixed cost affect marginal cost? Why is this relationship important?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
What is die difference between accounting and economic profit?
Are fixed costs also sunk costs? Explain.
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?
What is a production technology?
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?