1. The table below shows the hourly output and cost structure for a small-town pizza shop. Calculate Marginal Revenue and Marginal Cost to determine the pizza shop's profit-maximizing rate of output. Assume that the price of a pizza in this town is $10. Hourly Output of Pizzas 0 Total Hourly Cost ($) 5 1 9 2 11 3 12 4 14 5 18 6 24 7 32 8 42 9 54 10 10 68
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- What two lines on a cost curve diagram intersect at the shutdown point?Calculate the marginal cost, marginal revenue and profit for each unit of production? How many units should the firm produce to maximise profit? Describe the relationship between the marginal product and the total product of a firm? Marginal Cost Total Revenue Marginal Revenue Profit 0 100 190 300 450 500 505 308 Quantity Total Cost Marginal Cost 0 15 1 30 2 48 3 59 4 68 5 74 6 79 7 814. A puppet maker calculates that the yearly cost of running his manufactory is $14,000. Additionally it costs him $60 to create each of his puppets. The price per puppet is determined by the following price-demand equation: p=500–2x a. Find the Cost equation for the total number of puppets produced and sold Find the Revenue equation for the total number of puppets produced and sold b. c. How many puppets does he need to make and sell to break even? d. Use the Cost and Revenue equations to find the Profit function What is the price that he needs to charge if he wants to sell exactly 80 puppets? e.
- A special shoe manufacturer ABC Co. has costs of production as follows and solve all the subparts: Quantity 0 1 2 3 4 5 6 Total Variable Cost ($) 0 50 70 90 140 200 360 ABC Co.’s fixed costs are $100. Calculate average fixed costs, average variable costs, average total costs and marginal costs at each level of production. Draw the company’s cost curves in a clearly labelled graph. The price of ABC shoe is $50. What are the company’s profits? In case of loss, should the CEO continue operations or decide to shut-down? Which would be a wise decision? Explain. The chief financial officer tells the CEO that it’s better to produce only one shoe this month. What could be the reason for this advice by the CFO? What are the firm’s profits at that level of production? Is this the best decision? Explain.Question 3 The following graph shows the price, marginal cost, and average cost curves for a firm. MC Price (RM) ATC 40 27 16 12 MR 250 500 570 Quantity (Units)Macmillan Learning (Figure: The Cost Curves for Charlie's Cookie Confections) Use Figure: The Cost Curves for Charlie's Cookie Confections. The curve labeled X represents the firm's Cost per unit marginal O average 0 fixed costs per unit O variable costs per unit. cost curve. V W xह Y Quantity
- Jeremy worked at a bank with a monthly salary of $1,500. He decided to quit his job and open a bookstore inhis neighborhood. He now pays $500 in rent, $80 in utilities and $120 in wages every month. He also paysthe publisher $5 per book sold. This month Jeremy sold 100 books at the price of $30 per book.a. What was the total revenue this month? Calculate this month’s explicit fixed cost, the variable costand the total cost.b. How much accounting profit did Jeremy make?c. How much economic profit did Jeremy make?d. If Jeremy had not quit his job at the bank, he could have been promoted and got a pay raise of 30percent. How would this affect his accounting profit and his economic profit?The following is a total cost curve. Total cost ($) 1000 900+ 800- 700- 600- 500- 400- 300- 200- 100- 04 50 TC 100 150 200 250 300 350 Quantity (q) Q On the diagram to the right, sketch the corresponding marginal cost curve. Using the multipoint curved line drawing tool, draw the firm's marginal cost curve. Label this curve 'MC'. Note: Use the multipoint curved line drawing tool one time to draw the entire curve. Marginal cost per unit ($) 10.00 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00 0.00+ 0 50 100 150 200 250 Quantity (q) 300 350 Q After plotting the final point of your multipoint curve, press the Esc key on your keyboard to end your curve.Here’s the table showing costs, and quantity. Find the total revenue at $8. Quantity Total Cost 0 $ 8 1 9 2 10 3 11 4 13 5 19 6 27 7 37
- 100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars)Labor (mechanics) 0 1 2 3 4 Output (bikes) 0 20 50 60 64 Total fixed costs (dollars) 220 Alberto's marginal cost of producing the 20th bike is $ [Round your answer to two decimals.] Total variable cost (dollars) 120 Total cost (dollars) The table above gives costs at Alberto's Bike Shop. While Alberto is a bike enthusiast, unfortunately, Alberto's record keeping has been spotty. Each mechanic is paid $120 a day and labor costs are the only variable costs of production. What is the marginal cost of producing the 20th bike?Charlie Co. sells pastries and its production and cost table is given below. A workercosts $100 a day, the firm has fixed costs of $200.L Q MP MC TC ATC0 01 202 503 904 1205 1406 1507 155a. Complete the table above [7 marks]b. Compare the average total cost and the marginal cost and explain therelationship [3 marks]c. Describe the methods that can be used to determine where profit is maximized?[3 marks]