This chapter discussed many types of costs: opportunity cost, total cost, fixed cost, variable cost, average total cost, and marginal cost. Fill in the type of cost that best completes each sentence. Pick from: I opportunity cost . variable cost a total cost 0 average total cost 0 fixed cost 0 marginal cost a. What you give up in taking some action is called the b. is falling when marginal cost is below it and rising when mlarginal costs is a have it. c. A costs that does not depend on the quantity produced is ain) d. The cost of producing an extra unit of output is the e. In the ice cream industry in the short run, includes the cost of cream and sugar but not the cost of the factory. f. Profits equal total revenue minus 2. Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per yearjob as an accountant. a. Define Opportunity cost b. What is your aunt's opportunity cost of running the hardware store for a year? If your aunt thinks she can sell $510,000. Worth of merchandise in a year, should she open the store? Explain? 3. Nimbus, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Nimbus' output during a given day. l have completed the first two rows. Marginal Total Average Marginal Product Cost Total Cast Cast "II 52\"\" - - - - - - 3. Fill in the column of marginal products. What pattern do you see? How might you explain it? Hint: incorporate Diminishing Marginal Product. 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? d. Now fill in the column for marginal cost. (Recall that MC = ATC/AQ). What pattern do you see? e. Compare the column for marginal product with the column for marginal cost. Explain the relationship. f. Compare the column for average total cost with the column for marginal cost. Explain the relationship. 4. Consider the following cost information for a pizzeria: Quantity Total Variable Marginal Cost Marginal Cost Cost Cost (using total cost) (using variable cost) II-- a. What is the pizzeria's fixed costs? b. Complete the table (above) in which you calculate the marginal cost per dozen pizzas using the information on total cost. Also, calculate the marginal cost per dozen pizzas using the information on variable cost. I completed the first two rows. What is the relationship between these sets of numbers? Explain? 5. Jane's Juice Bar has the following cost schedules: Quantity Variable Marginal Cast Cast Variable Cost Total Cost Cost 75.00 a. Calculate average variable costs, average total cost, and marginal cost for each quantity. Please complete the table above. I filled in the first two rows. b. Graph all three curves. What is the relationship between the marginal-cost curve and the average-total-cost curve? Between the marginal-cost curve and the average-variabIe-cost curve? Explain? Does it look like this? If not, please go back and review. Does it look like this? If not, please go back and review. a: '55 8 4O 35 Marginal Cost 30 Average Total Cost 25 Average Variable Cost 0 1 2 3 4 5 6 Quantity of Juice