b. Does the firm have any fixed costs? Explain. c. If the price of the Deering M

Q: b. Does the firm have any fixed costs? Explain. c. If the price of the Deering M

1. Total cost (C) = 32 + 2Q^2 Average total cost (AC) = (32 + 2Q^2) / Q = (32/Q) + 2Q Variable cost (VC) = 2Q^2 Average variable cost (AVC) = 2Q^2 / Q = 2Q Marginal cost = Derivative of C = d/dQ (32 + 2Q^2) = 4Q Fixed cost (FC) = 32 Average fixed cost (AFC) = 32 / Q Level of Q at which AC is the minimum: AC = MC (32/Q) + 2Q = 4Q 2Q = 32/Q 2Q^2 = 32 Q^2 = 16 Q = 4 Answer: At the quantity level 4, Ac is the minimum.

ID: 1189038 • Letter: B

Question

b. Does the firm have any fixed costs? Explain.
c. If the price of the Deering Manufacturing Company’s product (per pound) is $3, is the firm making profit or loss? Explain.
d. Derive an equation for the firm’s marginal cost function.

3) A firm's short-run average cost [SAC] is described by the equation: SAC = 2,000/Q + 60 + 0.2Q. Determine the equation for the firm's marginal cost [MC]. What is the MC of producing the tenth unit of output?

4) Fill in the blanks.

Q TC TFC TVC AFC AVC MC

0 350

1 410

2 450

3 476

5) Thayer Corporation. is a major defense contractor, producing artillery shells for the Marine Corps landing craft. A recent study of production over the past year shows the following relationship between labor inputs and output:

Month Labor Output 1 10 450
2 9 440
3 2 300

4 5 375 5 8 428 6 6 395 7 7 413 8 1 270 9 4 353 10 3 328

a. Prepare a table that shows the average and marginal product of labor for Thayer, over the range of labor inputs indicated above.

b. The Marine Corp has agreed to buy an unspecified number of shells from Thayer at a price of $2 per shell. Labor costs are $38 per hour including fringe benefits. How many shells should Thayer produce, and how much labor should it hire?

6) Firm X sells output at P = $4 per unit and pays labor a wage of $20 per hour. The marginal product of labor is given by: MPL = 30 - .1L. The profit-maximizing quantity of labor is:

Explanation / Answer

Total cost (C) = 32 + 2Q^2

Average total cost (AC) = (32 + 2Q^2) / Q = (32/Q) + 2Q

Variable cost (VC) = 2Q^2

Average variable cost (AVC) = 2Q^2 / Q = 2Q

Marginal cost = Derivative of C = d/dQ (32 + 2Q^2) = 4Q

Fixed cost (FC) = 32

Average fixed cost (AFC) = 32 / Q

Level of Q at which AC is the minimum:

AC = MC

(32/Q) + 2Q = 4Q

2Q = 32/Q

2Q^2 = 32

Q^2 = 16

Q = 4

Answer: At the quantity level 4, Ac is the minimum.

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b. Does the firm have any fixed costs? Explain. c. If the price of the Deering M

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