Problem Set 5
Due: Monday, March 23rd
Please write as neatly as possible and clearly indicate each final answer by circling or double underlining
(this is not necessary for graphs).
Chapter 8 Questions:
1.
The following incomplete table shows a firm’s various costs of producing up to 6 units of output.
Fill in as much of the table as possible.
If you cannot determine the number in a box, explain why
it is not possible to do so.
Q
TC
TVC
TFC
AC
MC
AVC
1
18
2
10
3
16
4
66
5
10
18
6
108
2.
A firm’s longrun total cost curve is
gG±²³ = 40² − 10²
´
+ ²
µ
.
Over what range of output does
the production function exhibit economies of scale, and over what range does it exhibit
diseconomies of scale?
3.
Tricycles must be produced with three wheels and one frame for each tricycle.
Let Q be the
number of tricycles, W be the number of wheels, and F be the number of frames.
The price of a
wheel is
¶
·
and the price of a frame is
¶
¸
.
a.
Calculate the longrun total cost for producing tricycles, TC(Q,
¶
·
,¶
¸
).
b.
What is the production function for tricycles, Q(F, W)?
4.
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 Spring '07
 Codrin
 Economics, Supply And Demand, total cost curve

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