called C. The fisherman has a fixed cost of $10 (his pole). The opportunity cost of his time is $5 per hour. Graph w it and the fisherman's total-cost curve. Explain its shape. 4. Nimbus, Inc., makes brooms and then sells them door- pro- to-door. Here is the relationship between the number of workers and Nimbus's output in a given day: Average t the Marginal Total Total Marginal Workers Output Product Cost Cost Cost ut is the O O e store. 1 20 ar to rent would 2 50 intant. 3 90 ning a ks she 4 120 year, 5 140 he 6 150 7 155 a. Fill in the column of marginal products. What pattern do you see? How might you explain it? b. A worker costs $100 a day, and the firm has fixed costs of $200. Use this information to fill in the column for total cost. c. Fill in the column for average total cost. (Recall that ATC=TC/Q.) What pattern do you see?CHAPTER d. Now fill in the column for marginal cost. (Recall 8. The city government is consi that MC=ATC/AQ.) What pattern do you see? e. Compare the column for marginal product and the . A lump-sum tax of $3 column for marginal cost. Explain the relationship. hamburgers. f. Compare the column for average total cost and the . A tax of $1 per burge hamburgers. column for marginal cost. Explain the relationship. a. Which of the following 5. You are the chief financial officer for a firm that sells average variable cost, av digital music players. Your firm has the following ginal cost-would shift average-total-cost schedule: tax? Why? Show this in precisely as possible. Quantity Average Total Cost b. Which of these same fou a result of the per-burger 600 players $300 in a new graph. Label the 601 301 possible. Bar has the follSt ATC? he short run and in the long run? er of pretzels a. down in the short run, no change in the long run b. up in the short run, no change in the long run c. no change in the short run, down in the long run d. no change in the short run, up in the long run is de- il rises. 5. Ball Bearings, Inc. faces costs of production as follows: lost 1 to Total Total Fixed Variable the Quantity Costs Costs at $100 $0 100 50 ler a 100 70 - WN+ ster, 100 90 ts 100 140 it 100 200 What 100 360 al in a. Calculate the company's average fixed costs, average variable costs, average total costs, and 81 marginal costs at each level of production. His b. The price of a case of ball bearings is $50. Seeing cost. that he can't make a profit, the chief executive officer (CEO) decides to shut down operations. his What is the firm's profit/loss? Was this a wise decision? Explain. c. Vaguely remembering his introductory economics fol- course, the chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that 7 quantity. What is the firm's profit/ loss at that level of production? Was this the best decision? Explain. 37 56 6. Suppose the book-printing industry is competitive and begins in a long-run equilibrium. a. Draw a diagram showing the average total cost, marginal cost, marginal revenue, and supply curve of the typical firm in the industry. b. Hi-Tech Printing Company invents a new process charply reduces the cost of printing books