ECO182 - Lecture 9 Review

ECO182 - Lecture 9 Review - Fixed versus variable costs You...

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Fixed versus variable costs You paid $ 20,000 to buy a new car. In the first year you used it to generate 10,000 miles of travel. It costs $ 0.20 per mile to operate. It cost $ 1000 to insure it in the first year. A. The fixed cost is $ 20,000 + 0.20*10,000 + $1000 A. The fixed cost is $ 21,000 and the variable cost is $2,000 per year C. It is all variable cost. D. In this problem there is a sunk cost of $ 20,000 but it is not fixed.
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You paid $ 20,000 to buy a new car. In the first year you used it to generate 10,000 miles of travel. It costs $ 0.20 per mile to operate. It cost $ 1000 to insure it in the first year . A. The average cost per mile is $ 2.30/mile and the marginal cost is $ 0.20/mile B. The average and marginal costs are both $ 0.20/mile C. The more you drive the car the lower marginal cost will become. D. The more you drive the car, the higher average cost will become.
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An accountant has 100 customers and each pays him $ 2,000 each year. The accountant rents his office for $
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This note was uploaded on 10/10/2010 for the course ECO 182 taught by Professor Morgan during the Spring '08 term at SUNY Buffalo.

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ECO182 - Lecture 9 Review - Fixed versus variable costs You...

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