Question 5

Attempts |:|:|:| Keep the Highest / 1 5. Competition Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $25 each. His total cost each day is $300, of which $60 is a xed cost. He mows 15 lawns a day. In the short run, Bob should V . In the long run, Bob should V the industry. Consider the following cost information for a pizzeria: Quantity Total Cost Variable Cost ( Dozens of pizzas) (Dollars) (Dollars) 0 280 0 l 320 40 2 350 70 3 380 100 4 420 140 5 470 190 6 530 250 The pizzeria's fixed cost is Complete the third column of the following table by calculating the marginal cost per dozen pizzas using the information on total cost. Then complete the nal column by calculating the marginal cost per dozen pizzas using the information on variable cost. Quantity Total Cost Marginal Cost Variable Cost Marginal Cost Using Total Cost Using Variable Cost (Dozens of pizzas) (Dollars) (Dollars) (Dollars) (Dollars) 0 280 0 1 320 40 2 350 70 3 380 100 4 420 140 5 470 190 6 530 250 True or False: It doesn't matter whether you compute marginal cost using total cost or variable cost. True False 7. Lump-Sum Tax The city government is considering two tax proposals: o A lumpsum tax of $300 on each producer of hamburgers. ~ A tax of $1 per burger, paid by producers of hamburgers. Which of the following statements is true as a result of the lumpsum tax? Check all that apply. Average total cost will remain unchanged. Average fixed cost will increase. Average variable cost will remain unchanged. Marginal cost will decrease. which of the following statements is true as a result of the perburger tax? Check all that apply. Average total cost will increase. Average fixed cost will increase. Average variable cost will increase. Marginal cost will remain unchanged