Marginal cost for a fifth car.

Question

Suppose honda's total cost of producing four cars is $225,000 and its total cost of producing five cars is $250,000. a. What is the average total cost of producing five cars? b. What is the narginal cost of the fifth car? c. Draw the marginal- cost curve and the average-total-cost curve for a typical firm and explain why these curves cross where they do.

Answer 1

Question

Chapter 13.3, Problem 3QQ

To determine

Marginal cost for a fifth car.

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Suppose honda's total cost of producing four cars is $225,000 and its total cost of producing five cars is $250,000. a. What is the average total cost of producing five cars? b. What is the narginal cost of the fifth car? c. Draw the marginal- cost curve and the average-total-cost curve for a typical firm and explain why these curves cross where they do.

Why does the marginal product curve have an inverted “U” shape?2. Using diagrams, explain the relationship between the marginal product curve andmarginal cost curve? 3. What are the three stages of production? At which stage of production should a profit-maximising firm produce? 4. Fill in the appropriate numbers in the blank spaces, given the following information:output Total fixedcost (RM) Totalvariable cost(RM) Averagefixedcost(RM)Averagetotal cost(RM)Marginalcost(RM) 0 100 01 100 202 100 503 100 604 100 655 100 70 5. Complete the table below: Output TotalCost(RM) Totalvariablecost(RM) Totalfixedcost(RM)Averagefixedcost(RM)Averagetotalcost(RM)Marginalcost (RM) 0 505 16010 20020 25036 33058 40072 48088 580106 700130 820150 980

3 1. Economies of scale exist over the range of output to units. Does the firm experience diseconomies of scale? If so, over what range of output? 2. a. Over what range of output does it experience constant long-run costs? Calculate the following costs: b. At 2,250 units of output, long-run average cost is $ ________, long-run marginal cost is $________, and long-run total cost is $________. c. At 2,400 units of output, long-run average cost is $________, long-run marginal cost is $________, and long-run total cost is $________. 3. the minimum efficient scale (MES) is ________units. In order to maximize profit, must the firm operate at MES?