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HW5_cost

# HW5_cost - a What is your fixed cost of doing business What...

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ECO 201 HW5 Due:_________________ Student’s Name: _______________ “Principles of Microeconomics”, Mankiw ,5 th Edition. Type your homework assignments. Show necessary reasoning and calculations that lead to your answers. You may hand draw graphs or diagrams if you prefer. 6. Consider the following cost information for a pizzeria: Quantity Total cost Variable Cost 0 dozen pizzas \$300 \$0 1 350 50 2 390 90 3 420 120 4 450 150 5 490 190 6 540 240 a. What is the pizzeria’s fixed cost? b. Construct a table in which you can calculate the marginal cost per dozen pizzas using the information on total cost. Also, calculate the marginal cost per dozen pizzas using the informatioin on variable cost. What is the relationship between these sets of numbers. Comment.

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7. You are thinking about setting up a lemonade stand. The stand itself costs \$200. The ingredients for each cup of lemonade cost \$0.50.
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Unformatted text preview: a. What is your fixed cost of doing business? What is your variable cost per cup? b. Construct a table showing your total cost, average total cost, and marginal cost for output levels varying from 0 to 10 gallons. (Hint: There are 16 cups in a gallon) Draw the three cost curves. 10. Jane’s Juice Bar has the following cost schedules: Quantity Variable cost Total cost 0 vats of juice \$0 \$30 1 10 40 2 25 55 3 45 75 4 70 100 5 100 130 6 135 165 a. Calculate average variable cost, average total cost, and marginal cost for each quantity. Put these numbers in a similar table as above. b. Graph all three curves. What is the relationship between the marginal-cost curve and the average total cost curve? Between the marginal cost curve and the average variable cost curve? Explain...
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HW5_cost - a What is your fixed cost of doing business What...

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