Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sweatshirts per day Employee-hours per day 0 0 2 1 4 3 6 6 8 10 10 15 12 21 14 28 Suppose that the

Sweatshirts per day Employee-hours per day
0 0
2 1
4 3
6 6
8 10
10 15
12 21
14 28

Suppose that the going wage is $10/hour and South End Lifestyle's daily capital cost for renting the building and the sewing machines is fixed at $50.

a. [5 points] Calculate South End Lifestyle's variable cost, fixed cost, total cost, marginal cost, and average total cost of producing between 0 and 14 sweatshirts per day. Make sure to put marginal cost at the midpoint between units, and remember that MC = TC/Q.

Sweatshirts per day Employee-hours per day TVC TFC TC MC ATC
0 0
2 1
4 3
6 6
8 10
10 15
12 21
14 28

b. [5 points] At the market price of $22.50 per sweatshirt, what is South End Lifestyle's profit-maximizing quantity of sweatshirts? What is the firm's profit? What is the quantity need for profit maximization.

c. [5 points] Suppose that South End Lifestyle's capital cost were not $50 per day, but only $40 per day. Recalculate South End Lifestyle's variable cost, fixed cost, total cost, marginal cost, and average total cost. Now what is the profit-maximizing number of sweatshirts? What is the firm's profit?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Local Consumption And Global Environmental Impacts Accounting, Trade-offs And Sustainability

Authors: Kuishuang Feng, Klaus Hubacek, Yang Yu

1st Edition

1317577272, 9781317577270

More Books

Students also viewed these Economics questions