ECON 102 Chapter Notes - Chapter 8: Marginal Cost, Diminishing Returns, Variable Cost

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12 Apr 2016

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ECON 102 Full Course Notes

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Fixed costs = any cost that does not depend on the irm"s level of output: in the long run, there aren"t ixed costs. Variable costs = a cost that depends on the level of producion chosen. Q: falls as output rises because you have a ixed numerator with an increasing denominator. Total variable costs (tvc: depends on the techniques of producion that are available and the prices of inputs required by each technology. Short run ixed factors of producion stuck at current scale of operaions. The irm can hire more labor and buy more capital, but eventually diminishing returns scale will set in: diminishing returns to scale = each output costs more to produce marginal cost. 10th guy can only make 1 more burger than the 11th guy. If every guy ater the 10th produced just one more burger, you"d need 7 guys to produce the same amount as the 2nd guy.

Related Questions

Each unit of input, X, costs $10. Fixed costs are $50, regardless of the level of output.

a.Complete the table below.

Labor, X	Total Output (TPP)	Marginal Physical Product (MPP)	TFC	TVC	TC	AFC	AVC	ATC	MC/unit
0	0
1	15
2	45
3	70
4	90
5	105
6	110
7	112

b.If the product can be sold for $0.75 per unit, what is the optimal level of output?

C. Find the level of profit at the optimal level of output. Explain what would happen if the firm produced one more unit of output in terms of marginal cost and marginal revenue.

Production/Cost Exercises 1. The following is a short-run production table for a firm with labor as its only variable input. Wage = $ 310 Capital = 100 Capital Price= $20 Product Price= $65

Labor Output

0 0

1 50

2 110

3 160

4 200

5 230

6 250

7 260

8 265

9 260

10 250

A. Determine the following measures at all levels of output: MPL, APL, TFC, TVC, TC, TR, AVC, ATC, AFC, MC, PROFIT.

B. At what level of output is the profit maximized?

C. What kind of observations can you make about MC, price, average total cost, and profit?

ceruleanmosquito986

The Grinch Clinic pays its nurses $20 an hour. It also pays $100 a week rent and has other weekly overhead costs of $50. Supply costs are $1 per patient. The short-run production function, relating patient visits and hursing hours, is shown here. Given this relationship and the other specified data, calculate the total variable, total fixed, and total costs; average costs (variable, fixed, and total); and marginal costs at each output level.

Patient Visits: 1 - 2 - 3 - 4 - 5 - 6

Nursing Hours: 2 - 4 -8 - 14 - 22 - 32

I understand the Total Fixed Costs is $150; I also have the nurse cost, which is the nurses hours multipled by $20 per hour rate. What I don't understand is how to get the Total Variable Cost (TVC). Textbook shows the Total Variable Costs plus the Patient Visit. For example the first TVC is 41 (40 + 1 Patient Visit). Is this correct way to gete the TVC? If so, please explain. I believe once I understand how to get the TVC that I will be able to get the Total Cost, Average Total Cost and Marginal Cost.

Please help. Thank you.

ECON 102 Chapter Notes - Chapter 8: Marginal Cost, Diminishing Returns, Variable Cost

ECON 102 Full Course Notes

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