Use the table below to answer the following questions. Table 11.3.1 Labour Output TFC | TVC TẾ. (workers per (teapots per (dollars per (dollars per (dollars per day) day) day) 20 45 70 95 100 125 145 14) Refer to Table 11.3.1, which gives Tania's total cost schedule. The average fixed cost of producing 9 teapots per day is A) $1.54. B) $10.00. $1.25. D) $1.11. E) $2.22.
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Redstone Clayworks Inc. is located in Sedona, Arizona, and manufactures clay fire pits for patios. They are one of about two dozen firms around the world that manufacture and sell clay fire pits for retailers such as Home Depot, Lowe's, Front Gate, and other upscale home product chains. There is virtually no product differentiation. A clay fire pit is a clay fire pit.
The spreadsheet below gives some of Redstone's production cost data.
Assume that the world market demand and supply curves for clay fire pots intersect at $190 per unit.
|
Q |
TC |
TFC |
TVC |
AFC |
AVC |
ATC |
SMC |
TR |
MR |
Profit |
Average |
Profit |
|
Profit |
Margin |
|||||||||||
|
0 |
7000 |
7000 |
NIL |
NIL |
NIL |
NIL |
NIL |
0 |
NIL |
-7000 |
NIL |
nil |
|
100 |
14000 |
7000 |
7000 |
70 |
70 |
140 |
70 |
19000 |
190 |
5000 |
50 |
26% |
|
200 |
23000 |
7000 |
16000 |
35 |
80 |
115 |
90 |
38000 |
190 |
15000 |
75 |
39% |
|
300 |
32000 |
7000 |
25000 |
23.33 |
83.33 |
106.67 |
90 |
57000 |
190 |
25000 |
83.33 |
44% |
|
400 |
43000 |
7000 |
36000 |
17.5 |
90 |
107.5 |
110 |
76000 |
190 |
33000 |
82.5 |
43% |
|
500 |
52000 |
7000 |
45000 |
14 |
90 |
104 |
90 |
95000 |
190 |
43000 |
86 |
45% |
|
600 |
74000 |
7000 |
67000 |
11.67 |
111.67 |
123.33 |
220 |
114000 |
190 |
40000 |
66.67 |
35% |
|
700 |
97000 |
7000 |
90000 |
10 |
128.57 |
138.57 |
230 |
133000 |
190 |
36000 |
51.43 |
27% |
|
800 |
111000 |
7000 |
104000 |
8.75 |
130 |
138.75 |
140 |
152000 |
190 |
41000 |
51.25 |
27% |
|
900 |
132000 |
7000 |
125000 |
7.78 |
138.89 |
146.67 |
210 |
171000 |
190 |
39000 |
43.33 |
23% |
|
1000 |
152000 |
7000 |
145000 |
7 |
145 |
152 |
200 |
190000 |
190 |
38000 |
38 |
20% |
AFC = total fixed cost/total output.
AVC = total variable cost/total output.
ATC = total cost/total output.
MC = change in total cost/change in output.
Total revenue = price * quantity. And given that the demand and supply intersect at $190, which implies that the equilibrium price is $190 because the point where the demand equals the supply determines the price.
MR = change in total revenue/change in output.
Profit = total revenue - total cost.
Average profit = total profit/total output.
Profit margin = total profit/total revenue*100 or (revenue - cost)/revenue*100.
Question:
What level of output should the manager of Redstone choose to produce? Explain your choice in 50-100 words.
