Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is $6.00 per widget.
Output
Total Cost
0
100
10
150
20
180
30
200
40
240
50
300
60
375
70
475
80
600
90
750
100
1,000
a. Fill in the formula for AFC, AVC, ATC, MC, TR, MR, and Total Profit.
b. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, MC, TR, MR, and Total Profit.
Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is $6.00 per widget.
| Output | Total Cost |
| 0 | 100 |
| 10 | 150 |
| 20 | 180 |
| 30 | 200 |
| 40 | 240 |
| 50 | 300 |
| 60 | 375 |
| 70 | 475 |
| 80 | 600 |
| 90 | 750 |
| 100 | 1,000 |
a. Fill in the formula for AFC, AVC, ATC, MC, TR, MR, and Total Profit.
b. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, MC, TR, MR, and Total Profit.
Related textbook solutions
Related questions
A. Fill in the formula for AFC, AVC, ATC, and MC at the top of the column in the gray section within the table. B. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, and MC in the blue sections of the table.
|
Output |
Total Fixed Cost |
Total Variable Cost |
Total Cost |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
|
0 |
|
|
$600 |
|
|
|
|
|
5 |
|
|
900 |
|
|
|
|
|
10 |
|
|
1,150 |
|
|
|
|
|
15 |
|
|
1,350 |
|
|
|
|
|
20 |
|
|
1,600 |
|
|
|
|
|
25 |
|
|
1,900 |
|
|
|
|
|
30 |
|
|
2,275 |
|
|
|
|
|
35 |
|
|
2,725 |
|
|
|
|
|
40 |
|
|
3,375 |
|
|
|
|
|
45 |
|
|
4,225 |
|
|
|
|
|
50 |
|
|
5,325 |
|
|
|
|
C. Identify the efficient scale of the firm. Explain your reasoning.
Part II. Consider the values in the following table for the Winsome Widget Factory
|
Winsome Widget Factory |
|
|
Output |
Long-Run Average Total Cost |
|
0 |
------------------ |
|
5 |
170 |
|
10 |
110 |
|
15 |
85 |
|
20 |
83 |
|
25 |
78 |
|
30 |
75 |
|
35 |
75 |
|
40 |
80 |
|
45 |
82 |
|
50 |
97 |
a. Over what output levels do the economics of scale occur? Explain.
b. Over what output levels do constant returns to scale occur? Explain.
c. Over what output levels do diseconomies of scale occur? Explain.
|
TFC |
TVC |
AFC |
AVC |
ATC |
SMC |
|
50000 |
xx |
xx |
xx |
xx |
|
|
5000 |
5000 |
50 |
50 |
100 |
50 |
|
5000 |
14000 |
25 |
70 |
95 |
90 |
|
5000 |
22000 |
16.66 |
73.33 |
90 |
80 |
|
5000 |
33000 |
12.5 |
82.5 |
95 |
110 |
|
5000 |
45000 |
10 |
90 |
100 |
120 |
|
5000 |
61000 |
8.33 |
101.66 |
110 |
160 |
|
5000 |
79000 |
7.14 |
112.85 |
120 |
180 |
|
5000 |
99000 |
6.25 |
123.75 |
130 |
200 |
|
5000 |
121000 |
5.55 |
134.44 |
140 |
220 |
|
5000 |
145000 |
5 |
145 |
150 |
240 |
The world market demand and supply curves for clay fire pots intersect at $190 per unit. Add columns 9, and 10 to show, respectively, total revenue (TR) and marginal revenue (MR). Add column 11 to show a profit (i.e., TR-TC). Add column 12 to show profit per unit (i.e., average profit). Add column 13 to show the profit margin (i.e., price minus average total cost). Submit your Excel spreadsheet to the DropBox. [Hint: At Q = 400: AVC = 82.50, SMC = 110, MR = 190, profit = 38,000, and profit margin = 95].
