Complete the cost table below Quantity Total Cost Average Total Cost Marginal

Complete the cost table below quantity total cost

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8. Complete the cost table below: Quantity Total Cost ($) Average Total Cost ($) Marginal Cost ($) 0 0 1 35 2 25 3 28 4 115 5 40 8. Quantity Total Cost ($) Average Total Cost ($) Marginal Cost ($) 0 0 1 35 35 35 2 60 30 25 3 84 28 24 4 115 28.75 31 5 155 31 40 9. 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 81 Goolsbee1e_Solutions_Manual_Ch07.indd 81 11/15/12 3:08 PM 11/15/12 3:08 PM
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82 Part 2 Consumption and Production Solution Solution 9. Q (batches) Variable Cost ($) Average Total Cost ($) Average Fixed Cost ($) Average Variable Cost ($) 1 25 75 50 25 2 35 42.5 25 17.5 3 52 34 16.67 17.33 4 77 31.75 12.5 19.25 5 115 33 10 23 6 160 35 8.33 26.67 10. 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 $150,000. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not? 11. Derive formulas for average fixed cost, average variable cost, average total cost, and marginal cost for the following cost function: TC = 100 + 10 Q Costs ($/arrow) Quantity of arrows ATC 2 AVC AFC 1 AFC 2 ATC 1 MC Goolsbee1e_Solutions_Manual_Ch07.indd 82 Goolsbee1e_Solutions_Manual_Ch07.indd 82 11/15/12 3:08 PM 11/15/12 3:08 PM
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Costs Chapter 7 83 Solution Solution
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