A computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost
Posted: Wed Jul 06, 2022 6:19 am
A computer company produces affordable, easy-to-use homecomputer systems and has fixed costs of $250. The marginal cost ofproducing computers is $700 for the first computer, $250 for thesecond, $300 for the third, $350 for the fourth, $400 for thefifth, $450 for the sixth, and $500 for the seventh.
Output
Fixed
Cost
Variable
Cost
Total
Cost
Marginal
Cost
Average
Cost
Average
Variable Cost
1
$250
$700
$950
$700
2
$250
$925
$1175
$225
3
$250
$315
4
$250
$360
5
$250
$400
6
$250
$450
7
$250
$550
Complete the table. Round off to the nearest dollar.
At what price is the zero-profit point?
At what price is the shutdown point?
If the company sells the computers for $550, is it making aprofit or a loss? How big is the profit or loss?
If the firm sells the computers for $315, is it making a profitor a loss? How big is the profit or loss?
We expect the marginal cost to increase as this firm producesmore computers. But when the firm shifts from producing 1 to 2computers, marginal cost falls. What might explain this?
Output
Fixed
Cost
Variable
Cost
Total
Cost
Marginal
Cost
Average
Cost
Average
Variable Cost
1
$250
$700
$950
$700
2
$250
$925
$1175
$225
3
$250
$315
4
$250
$360
5
$250
$400
6
$250
$450
7
$250
$550
Complete the table. Round off to the nearest dollar.
At what price is the zero-profit point?
At what price is the shutdown point?
If the company sells the computers for $550, is it making aprofit or a loss? How big is the profit or loss?
If the firm sells the computers for $315, is it making a profitor a loss? How big is the profit or loss?
We expect the marginal cost to increase as this firm producesmore computers. But when the firm shifts from producing 1 to 2computers, marginal cost falls. What might explain this?