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Chapter 22: Q. 4 (page 507)

During the previous month, a firm produced 250tablet devices at an average variable cost of \(40and at an average fixed cost of\)10. What were the firm's total costs during the month?

Short Answer

Expert verified

The firm's total costs during the month is$12,500.

Step by step solution

01

Introduction

If such price from its products is below incremental cost curve so at profit-maximizing output level, a company can also opt to dissolve (or, more generally if it sells at multiple prices, its average revenue is a smaller amount than AVC). Developing everything won't create enough capital to afford the operating costs; producing anything would add deficits (costs in more than revenues) to the prices that'd inevitably be faced (the fixed costs). The firm just loses maintenance expenses from not delivering.
02

Explanation

Calculating Total Variable Cost
Total variable cost = Average variable cost× Output produced
=$40×250

=$10,000

Calculate Total fixed costs
Total variable cost = Average fixed costs × Output produced
=$10×250

=$2,500


Calculating Total Cost
Total Cost = Total fixed charge + Total Variable Cost
=$10,000+$2,500

=$12,500


The firm's total cost during the month is$12,500.

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Most popular questions from this chapter

The short-run production function for a manufacturer of portable power banks is shown in the table below. Based on this information, answer the following questions.

a. Calculate the average product at each quantity of labor.

b. Calculate the marginal product of labor at each quantity of labor.

c. At what point does marginal product begin to diminish?

In Problem 22-20, if the firm were to employ the 8th unit of labour and produce 380 units of output, what would be the average variable cost and the marginal cost?

During the past year, a firm produced 10,000laptop computers. Its total costs were \(5 million, and its fixed costs were \)2 million. What are the average variable costs of this firm?

Describe the long-run cost curves a typical firm faces and define a firm's minimum efficient scale

During autumn months, passenger railroads across the globe deal with a condition called slippery rail. It results from a combination of water, leaf oil, and pressure from the train's weight, which creates a slippery black ooze that prevents trains from gaining traction.

a. One solution for slippery rail is to cut back trees from all of a rail firm's rail network on a regular basis, thereby helping to prevent the problem from developing. If incurred, would this railroad expense be a better example of a fixed cost or a variable cost? Why?

b. Another way of addressing slippery rail is to wait until it begins to develop. Then the company purchases sand and dumps it on the slippery tracks so that trains already enroute within the rail network can proceed. If incurred, would this railroad expense be a better example of a fixed cost or a variable cost? Why?
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