23 I11.The Firm: Cost and Output Determination: Fill the red-colored cells 124 1

Question

23 I11.The Firm: Cost and Output Determination: Fill the red-colored cells 124 125 11I-1.Assume that the size of Caroline's factory 126 is fixed and Caroline can vary the quantity 127 of coffee produced only by changing the Q:Quantty Total of coffee Fhed Vald varable otal Average Average Average Margha cost lcups/h) Cost cost cost 010 cost 28 number of workers she employs: 129 This describes the production decisions that 130 Caroline faces in the short run. 0 3.00 3.00 0.00 13.30 3.00 0.30 3.00 0.30 3.30 030 2 380 3.00 080 150 040 050 3 450 3.00 150 100 050 150 121 132 1.1. How much is the average total cost 133 at the cell (1.11 in the table aside? 4 5.40 3.00 2.40 0.75 0.60 135 0.90 5 6.50 3.00 3.50 0.60 0.70 1.30 110 6 7.80 3.00 80 050 080 130 130 7 9.30 3.00 6.30 0.43 0.90 133 150 8 11.00 3.00 8.00 0.38 100 138 170 9 12.90 3.00 9.90 0.33 1.10 143 1.90 10 15003.00200 0.30 120 150 20 134 135 dollars 36 137 138 139 1.2 How much is the marginal cost of the 3rd cup 140 at the cell (1.2) in the table aside dollars 143 1.3 How much does it cost on average to make a typical cup of coffee when the coffee shop produces 45 146 1.4 How much does it addir Bth cup o At the current production level, the shop's average cost is lower than its marginel cost If the shop

Explanation / Answer

1.1 = ATC= TC/Q = $3.80/2= S1.90

1.2 Marginal cost of third cup = Total cost of 3rd cup minus otal cost of 2nd cup = $4.50 - $3.80= $0.70.

1.3 $ 1.50. ATC at 10th cup of coffee in an hour= AFC+AVC.= $0.30 + $1.20 = $1.50.

1.4 Marginal cost of eighth cup = Total cost of eight cup minus total cost of seventh cup = $11.00 - $9.30= $1.70.

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