Question
1.Suppose that Thomas' Tomatoes incurs a number of costs in making its delicious tomato spread. It must pay $25,000 for land, $5,000 for fertilizer, $5
1.Suppose that Thomas' Tomatoes incurs a number of costs in making its delicious tomato spread. It must pay $25,000 for land, $5,000 for fertilizer, $5 per case of tomato spread in labor cost, and $20 in packaging and processing costs per case.
a.Which costs mentioned above are considered fixed costs, and which costs above are considered variable costs?
b.Construct a Total Cost function for Thomas' Tomatoes in terms of Q, where Q is the number of cases of Thomas' Tomatoes' delicious spread.
c.Identify the Average Variable Cost of a case of Thomas' Tomatoes' delicious spread.
d.The marginal cost of a case of Thomas' Tomatoes' delicious spread is $25. Using the total cost function you identified in part (b), show that this information is consistent with the increase in Q from 25 to26.
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