XYZ restaurant sells donuts at $2 per unit. It uses capital (which it rents at $5 per hour under a contract for 5 and labor (which is paid a wage of $150 per hour of labor services)   K L Q MPL APL VML FC VC TC 5 0 0 0           5 1 50 50 50 50 25 150 175 5 2 125 75           5 3 225 100           5 4 375 150           5 5 450 75           5 6 450 0           5 7 400 -50           5 8 425 -75           5 9 450 -25           5 10 500 -50           5 11 525 25                 Complete the Table above Define firm’s fixed costs. Next, what is Firm’s FC in the Table above. Why? Define the Firm’s Variable Costs. Next, what is the VC in the Table above? Determine the Firm’s Total Cost of producing 50 units of output

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 41P: Compute the average total cost, average variable cost, and marginal cost of producing 50 and 72...
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XYZ restaurant sells donuts at $2 per unit. It uses capital (which it rents at $5 per
hour under a contract for 5 and labor (which is paid a wage of $150 per hour of
labor services)

 

K

L

Q

MPL

APL

VML

FC

VC

TC

5

0 0 0          

5

1 50 50 50 50 25 150 175

5

2 125 75          

5

3 225 100          

5

4 375 150          

5

5 450 75          

5

6 450 0          

5

7 400 -50          

5

8 425 -75          

5

9 450 -25          

5

10 500 -50          

5

11 525 25      

 

 

 

 

 

Complete the Table above

  1. Define firm’s fixed costs. Next, what is Firm’s FC in the Table above. Why?
  1. Define the Firm’s Variable Costs. Next, what is the VC in the Table above?
  2. Determine the Firm’s Total Cost of producing 50 units of output
  1. What is the variable cost of producing 375 units of output?

How many units of the variable input should be used to maximize profits?

Define profit? What are the maximum profits this firm can earn?

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