PROBLEM SET 6

PROBLEM SET 6 - PROBLEM SET 6 Costs and Cost Curves...

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Unformatted text preview: PROBLEM SET 6 Costs and Cost Curves Department of Economics Professor William J. Stull Temple University Economics 1902 A. Carrots E. Fudd, Inc. produces organic carrots using labor and capital. In the short run capital is fixed and labor is variable. Fudd's short run cost schedules for levels of daily output (Q) between 0 and 7 cases are shown in Figure A. 1. Fill in the missing numbers in the table (labeled >). Note that the marginal cost values are entered between the output quantities. (You might find it useful to write the various cost concept formulas under the table before beginning.) 2. Explain in one sentence why all the numbers in column 2 are the same. ___________ _____________________________________________________________________ _____________________________________________________________________ 3. Explain in one sentence why the first number in column 3 is zero. _______________ ____________________________________________________________________ _ ____________________________________________________________________ _ 4. Give a one sentence economic interpretation of the third number in column 4. ____________________________________________________________________ _ ____________________________________________________________________ _ 5. In any row, why is the column 7 number always bigger than the column 6 number? ____________________________________________________________________ ____________________________________________________________________ 6. Give a one sentence economic interpretation of the last number in column 7. ______ ____________________________________________________________________ _ Figure A (1) (2) (3) (4) (5) (6) (7) (8) Quantity of Output (Q) Total Fixed Cost (TFC) Total Variable Cost (TVC) Total Cost (TC) Average Fixed Cost (AFC) Average Variable Cost (AVC) Average Total Cost (ATC) Marginal Cost (MC)---------------------------------------------------------------------------------------- > > >------ > 1 > > > > 10.0 > 8.0 2 > > > > > > > 3 > > 30.0 > > > > 4 > > > > > 8.5 > 5 > > > 1.2 6.8 > > 6 > 42.0 > > > > 10.0 7...
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PROBLEM SET 6 - PROBLEM SET 6 Costs and Cost Curves...

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