Question
Use the following to answer questions (1) through (4): A producer of high performance automobile tires uses three inputs, namely rubber (where R denotes the
Use the following to answer questions (1) through (4): A producer of high performance automobile tires uses three inputs, namely rubber (where R denotes the quantity of rubber, in pounds), capital (where K denotes the quantity of machines used), and labor (where L denotes the number of workers hired). Suppose Q denotes the quantities of tires produced. Suppose the price of capital is $1,000, the price of rubber is $5, and the price of labor is $2,500. Further, in any given month, K is fixed at 10, with the firm facing the following monthly production schedule: Q. R L 0 0 0 100 3000. 10 200 6000. 20 300 9000 30 [1] The total cost of producing 100 tires per month exceeds $45,000. A. True B. False [2] The average fixed cost of producing 300 tires per month is closest in value to: A. $400 B. $300 C. $200 D. $100 [3] The average variable cost of producing 200 tires per monthcis closest in value to: A. $400 B. $300 C. $200 D. $100 [4] Within any given month, the firm is operating in the short-run. A. True B. False
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