Subpart (a): Explanation The table – 1 represents the value of the cost of the production. Table – 1 Quantity Total fixed cost Total variable cost 0 100 0 1 100 50 2 100 70 3 100 90 4 100 140 5 100 200 6 100 360 The average fixed cost can be determined by using the formula. Average fixed cost = Total fixed cost Quantity (1) Substitute the respective value in equation (1) to calculate the average fixed cost for 1 st unit. Average fixed cost = 100 1 = 100 The average fixed cost is $100 . The table - 2 shows the value of the average fixed cost that is obtained by using the equation (1). Table - 2 Quantity Total fixed cost Total variable cost Average fixed cost 0 100 0 – 1 100 50 100 2 100 70 50 3 100 90 33.3 4 100 140 25 5 100 200 20 6 100 360 16.7 The average variable cost can be determined by using the formula. Average variable cost = Total variable cost Quantity (2) Substitute the respective value in equation (2) to calculate the average variable cost for 1 st unit. Average variable cost = 50 1 = 50 The average variable cost is $50 . The table -3 shows the value of the average variable cost that is obtained by using the equation (2). Table – 3 Quantity Total fixed cost Total variable cost Average fixed cost Average variable cost 0 100 0 – – 1 100 50 100 50 2 100 70 50 35 3 100 90 33.3 30 4 100 140 25 35 5 100 200 20 40 6 100 360 16.7 60 The average total cost can be determined by using the following formula. Average total cost = Average variable cost + Average fixed cost (3) Substitute the respective value in equation (3) to calculate the average total cost for 1 st unit Subpart (b): To determine The fixed cost, average variable cost, average total cost, and marginal cost, profit or loss of the firm if they shutdown, profit or loss of the firm if they continue to produce. Subpart (c): To determine The fixed cost, average variable cost, average total cost, and marginal cost, profit or loss of the firm if they shutdown, profit or loss of the firm if they continue to produce.

Bundle: Principles of Microeconomics, Loose-leaf Version, 8th + MindTap Economics, 1 term (6 months) Printed Access Card

8th Edition

ISBN: 9781337379151

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Question

Chapter 14, Problem 4PA

Subpart (a):

To determine

The fixed cost, average variable cost, average total cost, and marginal cost, profit or loss of the firm if they shutdown, profit or loss of the firm if they continue to produce.

Subpart (b):

To determine

The fixed cost, average variable cost, average total cost, and marginal cost, profit or loss of the firm if they shutdown, profit or loss of the firm if they continue to produce.

Subpart (c):

To determine

The fixed cost, average variable cost, average total cost, and marginal cost, profit or loss of the firm if they shutdown, profit or loss of the firm if they continue to produce.

Expert Solution & Answer

Chapter 14 Solutions

Bundle: Principles of Microeconomics, Loose-leaf Version, 8th + MindTap Economics, 1 term (6 months) Printed Access Card

Ch. 14.1 - Prob. 1QQ Ch. 14.2 - How does a competitive firm determine its...Ch. 14.3 - Prob. 3QQ Ch. 14 - Prob. 1CQQ Ch. 14 - Prob. 2CQQ Ch. 14 - Prob. 3CQQ Ch. 14 - Prob. 4CQQ Ch. 14 - Prob. 5CQQ Ch. 14 - Prob. 6CQQ Ch. 14 - Prob. 1QR

Ch. 14 - Prob. 2QR Ch. 14 - Prob. 3QR Ch. 14 - Prob. 4QR Ch. 14 - Prob. 5QR Ch. 14 - Prob. 6QR Ch. 14 - Prob. 7QR Ch. 14 - Prob. 8QR Ch. 14 - Prob. 1PA Ch. 14 - Prob. 2PA Ch. 14 - Prob. 3PA Ch. 14 - Prob. 4PA Ch. 14 - Prob. 5PA Ch. 14 - A firm in a competitive market receives 500 in...Ch. 14 - Prob. 7PA Ch. 14 - Prob. 8PA Ch. 14 - Prob. 9PA Ch. 14 - Prob. 10PA Ch. 14 - Suppose that each firm in a competitive industry...

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