Homework on Chapter 6

# Homework on Chapter 6 - and use marginal analysis to answer...

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Homework on Chapter 6 The cost structure of competitive small-scale gold mine. Weekly Output Tot. Fixed Tot. Variable Total Average Average Marginal in Ounces Costs Costs Costs Variable Costs Total Costs Costs 0 \$ 800.00 0.00= 5 \$ 800.00 \$1,500.00 10 \$ 800.00 2850.00 15 \$ 800.00 4050.00 20 \$ 800.00 5400.00 25 \$ 800.00 6900.00 30 \$ 800.00 8550.00 35 \$ 800.00 10350.00 40 \$ 800.00 12300.00 45 \$ 800.00 14400.00 50 \$ 800.00 16650.00 55 \$ 800.00 19050.00 60 \$ 800.00 21600.00 The costs above are economic, not accounting costs. The given costs include both explicit costs and opportunity costs. Since you are not given accounting costs this problem cannot be solved uniquely by using accounting methods. Copy the above information to an Excel sheet; then complete the above table.
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Unformatted text preview: and use marginal analysis to answer the following questions: 1. If the world gold price is \$240 per ounce, how many ounces should this mine produce to maximize its profits or minimize its losses? 2. If the world gold price increases to \$300 per ounce, how many ounces should this mine produce to maximize its profits or minimize its losses? 3. If gold sells at \$300 per ounce, what profit or loss will it realize? 4. If the world gold price increases to \$330 per ounce, how many ounces should this mine produce to maximize its profits or minimize its losses? 5. If it sells at \$330 per ounce, what profit or loss will it realize?...
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