11.5 Q&A

Suppose the total cost of producing 15.000 Tennis balls is $50.000 and the fixed cost is $10.000. 1) What is the variable cost? 2) When output is 15.000, what is the average variable cost? 3) When output is 15.000, what is the average fixed cost? 4) Assuming the usual shape, the dollar difference between average total cost and average variable cost ... as output increases

1) $40.000 2) (40.000/15.000) = 2.666 = 2.67 3) (10.000/15.000) = 0.666 = 0.67 4) decreases

List the errors in the graph to the right.

AFC should be MC ATC should be AVC AVC should be AFC

As the level of output increases, the difference between the value of average total cost and average variable cost

decreases because average fixed cost decreases as output increases

The marginal cost curve intersects both the average variable cost and the average total cost curves at their..

minimum

MOOC question: The marginal cost of offering a Mooc are low because

while the upfront time to create the material is costly, adding another student is low cost.

use the information in the graph to the right to fund the values for the following at an output level of 45 1. The marginal cost is 2. The total cost is 3) The variable cost is 4) The fixed cost is

1) 18 From the graph 2) 1935 Quantity X ATC 45*42 3) 1350 Quantity X AVC 45*30 4) 585 Total cost - Var. cost 1935-1350=585

Explain how the listed events would affect the following at southwest Airlines Southwest signs a new contract with the Transport Workers union that requires the airline to increase wages for its flight attendance 1. Marginal cost would be 2. Average variable cost would 3. Average fixed cost would 4. Average total cost would The Fed. Government starts to levy a $20 per passenger carbon emission tax Across the board 10% increase in executive sales decides to double its TV advertising budget

1. Increase 2. increase 3. remain unchanged 4. increase Carbon Tax 1. Increase 2. increase 3. remain unchanged 4. increase Executive salary increase 1. remain unchanged 2. remain unchanged 3. increase 4. increase TV advertising budget increase 1. remain unchanged 2. remain unchanged 3. increase 4. increase

in what sense is this tax smaller when the amount of business is larger?

As production increases, fixed cost can be allocated over a greater amount of output, decreasing the average cost of the tax

What cost measure is equal to AFC+AVC? All of the following cost measures reach their minimum points when they are equal to the value of the marginal cost, except one. Which one? As output increases, the vertical distance between average total cost and average variable cost curve gets ... and equals...

Average total cost Average fixed cost smaller / average fixed cost

In the ancient world, a book.... a. Suppose that the fixed cost of preparing a codex was 58 drachmas and that there was no similar fixed cost for a scroll. Would and ancient book publisher who intended to sell 5 copies of a book be likely to publish it as a scroll or codex? What if he intended to sell 10 copies? b. Although most of the books were published as scrolls in the first century AD, by the third century most were published as codices. Consider only the factors mentioned in this problem, explain why this change may have taken place?

a. If a publisher intended to sell 5 copies, he would publish the books as a scroll because the average cost would be lower than a codex. If he intended to sell 10 copies, he would publish the book as a codex because the average cost would be lower than as a scroll b. By the third century, enough books were being published such that the average cost of producing a book as codex was lower than the average cost of producing a book as a scroll