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8. Complete the cost table below:QuantityTotal Cost ($)Average Total Cost ($)Marginal Cost ($)00——13522532841155408. QuantityTotal Cost ($)Average Total Cost ($)Marginal Cost ($)00——135353526030253842824411528.7531515531409. Consider the costs for Catherine’s cupcake business:Quantity(batches)Fixed Cost ($)Total Cost ($)1507525085350102450127550165650210Re-create the above table with columns showing Catherine’s variable cost, average total cost, average fixed cost, and average variable cost.Goolsbee1e_Solutions_Manual_Ch07.indd 81Goolsbee1e_Solutions_Manual_Ch07.indd 8111/15/12 3:08 PM11/15/12 3:08 PM
82Part 2 Consumption and ProductionSolutionSolution9. Q(batches)Variable Cost ($)Average Total Cost ($)Average Fixed Cost ($)AverageVariable Cost ($)12575502523542.52517.53523416.6717.3347731.7512.519.2551153310236160358.3326.6710. Daniel’s Midland Archers (DMA) makes children’s wooden practice arrows. Draw a set of representative short-run cost curves for DMA. Include average variable cost, average fixed cost, average total cost, and marginal cost.a. Suppose that Congress imposes a 39-cent excise tax on each children’s wooden practice arrow DMA sells. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not?b. Suppose that the city where DMA produces arrows increases the annual property tax on DMA’s factory from $80,000 to $150,000. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not?11. Derive formulas for average fixed cost, average variable cost, average total cost, and marginal cost for the following cost function:TC= 100 + 10QCosts($/arrow)Quantity of arrowsATC2AVCAFC1AFC2ATC1MCGoolsbee1e_Solutions_Manual_Ch07.indd 82Goolsbee1e_Solutions_Manual_Ch07.indd 8211/15/12 3:08 PM11/15/12 3:08 PM