Pearson eText Microeconomics -- Access Card
2nd Edition
ISBN: 9780136849513
Author: Acemoglu, Daron, Laibson, David, List, John
Publisher: PEARSON
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Question
Chapter 6, Problem 3P
(a)
To determine
Complete the given table and estimate AFC, when 5 widgets are produced.
(b)
To determine
1. Whether the Marginal Cost (MC) of producing
2. Whether the production of
(c)
To determine
ATC for producing
(d)
To determine
MC, when the sixth widget is produced.
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The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner.
Cheeseburger Production Costs
Quantity(burgers per hour)
Average Variable Cost (dollars)
Average Total Cost (dollars)
Marginal Cost (dollars)
0
—
—
—
10
$1.00
$6.60
$1.00
20
0.70
3.50
0.40
30
0.70
2.57
0.70
40
0.78
2.18
1.00
50
0.88
2.00
1.30
60
1.07
2.00
2.00
70
1.34
2.14
3.00
80
1.74
2.44
4.50
90
2.23
2.86
6.20
100
2.81
3.37
8.00
a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum .
b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .
Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5,000 bags of potato chips at the same total cost. Which of the following statements is true? Hint: If the level of output changes, only the variable costs will change.
a.If both produce more, Kyle's costs will exceed Stan's costs.
b.If both produce less, their costs will still be equal.
c.If both produce more, their costs will still be equal.
d.If both produce less, Kyle's costs will exceed Stan's costs.
Consider the following Table:
TC
100
140
90
150
80
160
3
70
170
4
60
180
5
50
190
40
200
30
210
8
20
220
9
10
230
10
240
which contains the demand schedule for a service and the long-run total cost TC of providing it (the cost of producing the quantity zero is a quasi-fixed cost).
a. In order to answer the following questions, you may need to calculate variables like ATC, MC, R, etc. Copy and paste the preceding table in the Answers section below, including
calculations of the values of all the variables that you will find relevant.
b. What quantity will be socially efficient to produce in this industry? How many firms should be in the industry in order to have the efficient quantity produced? Why? What will be the
industry's profit if the efficient quantity is to be sold? (Hint: ATC may help to explain this).
c. What quantity would you expect that it will be produced in this industry and at what price will be sold if the government does not intervene in order to modify the market…
Chapter 6 Solutions
Pearson eText Microeconomics -- Access Card
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