hw solution ch 13

# hw solution ch 13 - Ch 13 hw solution 6 a cost b Quantity 0...

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Ch 13 hw solution 6. a. The fixed cost is \$300, because fixed cost equals total cost minus variable cost. b. Quantity Total Cost Variabl e Cost Marginal Cost (using total cost) Marginal Cost (using variable cost) 0 \$300 \$0 --- --- 1 350 50 \$50 \$50 2 390 90 40 40 3 420 120 30 30 4 450 150 30 30 5 490 190 40 40 6 540 240 50 50 Marginal cost equals the change in total cost for each additional unit of output. It is also equal to the change in variable cost for each additional unit of output. This occurs because total cost equals the sum of variable cost and fixed cost and fixed cost does not change as the quantity changes. Thus, as quantity increases, the increase in total cost equals the increase in variable cost. 7. a. The fixed cost of setting up the lemonade stand is \$200. The variable cost per cup is \$0.50. Figure 9 b. The following table shows total cost, average total cost, and marginal cost. These are plotted in Figure 9.

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Quantity (gallons) Total Cost Average Total Cost Marginal Cost 0 \$200 --- --- 1 208 \$208 \$8 2 216 108 8 3 224 74.7 8 4 232 58 8 5 240 48 8 6 248 41.3 8 7 256 36.6 8 8 264 33 8 9 272 30.2 8 10 280 28 8 8.
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