Assignment Three
Complete this cost table answer the following questions (based on my presentation on cost – I filled some for example)
Quantity
FC
VC
TC
AFC
AVC
ATC
MC
0
60
0
60
—
—
—
—
1
60
45
105
60
45
105
45
2
60
85
145
30
40
3
60
120
4
60
150
5
60
185
6
60
225
7
60
270
8
60
325
9
60
390
10
60
495
Use Excel to Graph AFC, AVC, ATC, MC. It should look like this.
Did you notice that MC curve goes to minimum before the other curves AVC, ATC? Can managers use this curve a an signal to when the unit cost starts to rise? That would be the optimal number units to produce with low cost in the short run.
What are economies of scale and diseconomies of scale? Why is that concept important?
In many network-electronic industries, MC is zero, like your cell phone service or internet or google, adding one customer costs zero dollars. Is that also true about this class – do you think adding one student costs MMU zero? Explain.
Here is a thinking question- requires some search. They say that people moving to large cities (urbanization) increases the demand for resources like food and energy, while smaller towns uses less food, energy, and produces less pollution. Do few minutes of research. Is that true. Cite your sources? That means we have reached and passed the optimal point of big city size. The marginal cost of urbanization is now high — like NYC or Chicago or Mexico city. What do you think?
Why is pure competition the best type of market for consumers?
In the Pure competition example in my presentation for optimal production in a purely competitive market, when the price pr MR was 131 and the optimal answer was 9 units. And the profit was 299 (highlighted) . Change price to 100 (column 5 will be $100). What is the optimal quantity and profit (excel answer is recommended)
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