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Let's assume that a firm produces 20 products per week. The firm employs 2 part-time workers at a total wage cost of $900 per week ($450 per worker). Let's assume that this is the firm's only variable cost (so TVC is $900). The firm's total fixed cost (TFC) is $300. What is this firm's total cost and average total cost? Total cost is $600 and average total cost is $30 If a firm has positive explicit and implicit costs, then: Total cost is $1,200 and average total cost is $60 the owner will have no accounting profits Total cost is $1,800 and average total cost is $120 the firm's accounting profit will be greater than the economic profit Total cost is $900 and average total cost is $45 the owner will have no earnings that year. Total cost is $1,600 and average total cost is $70 Question z then the firm's accounting profits are smaller than the economics profits Quantity TO TVC TFC ATC AVC MC 10 A computer manufacturer produces 200 PCs per week and experiences a cost of $400 per PC. 20 Two years later it expands and changes all of its inputs and produces 900 PCs per week and finds that its cost are now $350 per PC. This is an example of: W N 30 130 O decreasing returns to scale. 20 Economies of Scale 160 The respective cost values when the firm's output is 5, are: Diseconomies of Scale Constant returns to scale. 190: 140; 50; 30; 62.85, 20. 330, 300; 30; 47.1: 42.9; 20. An example of an implicit cost for a typical firm is: 170: 30; 10: 28; 38; 20 150: 140; 10; 30: 28; 20 the expense for the purchase of a new piece of furniture Graphically, the marginal cost curve_ _. the average total cost curve_ and the average fixed cost curve payroll expenses for part-time staff. the value of the owner's own time O is upward sloping: is d wnward sloping: slopes up first and then slopes down expense for a maintenance fee slopes up first and then opes down and then slopes up; slopes up continuously rent on a building, including a mo her own building. is downward sloping; is slopes down first and then pes upward; slopes down and then slopes upward; slopes down continuously For a typical firm, average variable costs D Question 4 decreases at low quantities produced. Then it gradually keeps increasing as the company in output. Diseconomies of scale occur when: is very high at any quantity produced due to high taxes, high prices on gasoline and other natural resources. A firm's long run average variable is very high at low quantities produced. Then it gradually keeps increasing as the company increases its output. A firm's long run average total decreases as it produces more products per period A firm's marginal costs decre is not important. The company mostly looks at the total variable cost. Variable cost is the biggest cost for A firm's marginal production decreases as its production increase large firms. A firm's long run average total costs decrease as its production increases. Let's assume that a firm's total weekly costs are as follows: Let's assume that a firm's total weekly costs are as follows: 1. Salaries = $2,000. 2. Supplies = 1. Salaries of hired workers - $1,200. $500. 3. Rent = $400. In addition. the owners have invested their own money into the business. 2. Supplies = $400. This could have earned them interest of $50 per week if they had chosen to put it into a bank 3. Rent = $1,000. instead of investing it into their business, If the firm has weekly revenue of $4,000, the firm's 4. The owners have invested a certain amount of their own money into the business, This could accounting profit is and the economic profit is have earned them interest of $200 per week if they had chosen to put it into a bank instead of esources investing it into their business. 5. The value of the owner's time is estimated to be $1,200 per week. $700. $800 What are the firm's total economic costs? $1,150: 3950 $800: $700 $2.500 -$400; $550 $3,800 $1,100; $1,050. $2,800 $2,600 $4,000