The Trouser Company has fixed costs of 2,400 per week. In addition, we have some information about its total costs of production. Output 0 20 40 60 80 100 120 140 TC 2400 5300 6700 7200 7700 9100 12000 17400 a) For each of the output levels in the table, calculate the Trouser Company’s average variable costs (AVC), average (total) cost (AC) and marginal cost (MC). b) Sketch a diagram showing the marginal cost curve, the average variable cost curve, and the firm’s short run supply curve. c) Explain how the firm would maximise its profit, assuming that it faces conditions of perfect competition, in the short run.
The Trouser Company has fixed costs of 2,400 per week. In addition, we have some information about its total costs of production. Output 0 20 40 60 80 100 120 140 TC 2400 5300 6700 7200 7700 9100 12000 17400 a) For each of the output levels in the table, calculate the Trouser Company’s average variable costs (AVC), average (total) cost (AC) and marginal cost (MC). b) Sketch a diagram showing the marginal cost curve, the average variable cost curve, and the firm’s short run supply curve. c) Explain how the firm would maximise its profit, assuming that it faces conditions of perfect competition, in the short run.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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The Trouser Company has fixed costs of 2,400 per week. In addition, we have some information about its total costs of production.
Output
0
20
40
60
80
100
120
140
TC
2400
5300
6700
7200
7700
9100
12000
17400
a) For each of the output levels in the table, calculate the Trouser Company’s average variable
b) Sketch a diagram showing the marginal cost curve, the
c) Explain how the firm would maximise its profit, assuming that it faces conditions of
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