# Additional problems cost (4) - 3. The table below gives...

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Additional Problem #6: Production Cost 1. Complete the cost table to make it consistent with the given numbers. Then plot the total cost functions for the range of output 0 - 16 on one diagram, and the average and marginal cost functions on another diagram. L Q TC TFC TVC ATC AFC AVC MC 0 0 25 1 4 25 2 10 4.17 3 13 5.77 4 15 8.33 5 16 150 2. A commercial fisherman notices the following relationship between hours spent fishing and the quantity of fish caught.

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2 Hours Quantity of Fish (in lbs) 0 0 1 10 2 18 3 24 4 28 5 30 The fisherman has a fixed cost of \$10 (his pole). The opportunity cost of his time is \$5 per hour. a) Calculate the fisherman’s total cost and graph it below. b) Calculate the fisherman’s average total cost, average variable cost, and marginal cost and graph them below.
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Unformatted text preview: 3. The table below gives the production function for Betty’s Hot Air Balloon Rides. 3 Labor Output (rides per day) (workers per day) Plant 1 Plant 2 Plant 3 Plant 4 1 4 10 13 15 2 10 15 18 21 3 13 18 22 24 4 15 20 24 26 5 16 21 25 27 # of Balloons 1 2 3 4 Betty pays \$500 a day for each balloon she rents and \$250 a day for each balloon operator she hires. a) Find and graph the average total cost curves for each plant size. Put these in one graph and label each one. b) Draw Betty’s long-run average cost curve in the above graph and label it LRAC. Then indicate the minimum efficient scale of operations with Q* in your graph. c) Briefly explain how Betty uses her long-run average cost information to determine how many balloons to rent....
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## This document was uploaded on 02/26/2011.

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Additional problems cost (4) - 3. The table below gives...

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