Eco Assistance
Economic
Question 1: (a) Complete the following table of costs for a firm. (Note: enter the figures in the MC column between outputs of 0 and 1, 1 and 2, 2 and 3, etc.) Output (units) | TC(＄) | AC(＄) | MC(＄) | 0 | 55 | ---- | 30 | 1 | 85 | 85 | | | | | 25 | 2 | 110 | 55 | | | | | 20 | 3 | 130 | 43 | | | | | 30 | 4 | 160 | 40 | | | | | 50 | 5 | 210 | 42 | | | | | 70 | 6 | 280 | 47 | | | | | 90 | 7 | 370 | 53 | | | | | 110 | 8 | 480 | 60 | | | | | 130 | 9 | 610 | 68 | | | | | 150 | 10 | 760 | 76 | | (b) How much is total fixed cost at: (1) an output of 0 units?
Answer
The “0 units” total fixed cost is 55.
(2) an output of 6 units?
Answer
The “6 units” total fixed cost also is 55.
(c) How much is average fixed cost at: (1) an output of 5 units?
Answer
The “5 units” total fixed cost is 55.
So the “5 units” average fixed cost is 11.
(2) an output of 10 units?
Answer
The “10 units” total fixed cost is 55.
So the “10 units” average fixed cost is 5.5.
(d) How much is total variable cost at an output of 5 units?
Answer
The “5 units” total fixed cost is 55. And the “5 units” total cost is 210.
So the “5 units” total variable cost is 155.
(e) How much is average variable cost at an output of 10 units?
Answer
The “10 units” total fixed cost is 55. And the “10 units” total cost is 760.
Then the “10 units” total variable cost is 705. So the “10 units” average variable cost is 70.5.
Question 2
Suppose the jeans industry is an oligopoly in which each firm sells its own distinctive brand of jeans, and each firm believes its rivals will not follow its price increases but will follow its price cuts.
Draw and explain the demand curve facing each firm, and given this demand curve, dose this mean that firms in the jeans do or do not compete against one another?
Answer
Demand curve
Explanation
The oligopoly is a
Question 1: (a) Complete the following table of costs for a firm. (Note: enter the figures in the MC column between outputs of 0 and 1, 1 and 2, 2 and 3, etc.) Output (units) | TC(＄) | AC(＄) | MC(＄) | 0 | 55 | ---- | 30 | 1 | 85 | 85 | | | | | 25 | 2 | 110 | 55 | | | | | 20 | 3 | 130 | 43 | | | | | 30 | 4 | 160 | 40 | | | | | 50 | 5 | 210 | 42 | | | | | 70 | 6 | 280 | 47 | | | | | 90 | 7 | 370 | 53 | | | | | 110 | 8 | 480 | 60 | | | | | 130 | 9 | 610 | 68 | | | | | 150 | 10 | 760 | 76 | | (b) How much is total fixed cost at: (1) an output of 0 units?
Answer
The “0 units” total fixed cost is 55.
(2) an output of 6 units?
Answer
The “6 units” total fixed cost also is 55.
(c) How much is average fixed cost at: (1) an output of 5 units?
Answer
The “5 units” total fixed cost is 55.
So the “5 units” average fixed cost is 11.
(2) an output of 10 units?
Answer
The “10 units” total fixed cost is 55.
So the “10 units” average fixed cost is 5.5.
(d) How much is total variable cost at an output of 5 units?
Answer
The “5 units” total fixed cost is 55. And the “5 units” total cost is 210.
So the “5 units” total variable cost is 155.
(e) How much is average variable cost at an output of 10 units?
Answer
The “10 units” total fixed cost is 55. And the “10 units” total cost is 760.
Then the “10 units” total variable cost is 705. So the “10 units” average variable cost is 70.5.
Question 2
Suppose the jeans industry is an oligopoly in which each firm sells its own distinctive brand of jeans, and each firm believes its rivals will not follow its price increases but will follow its price cuts.
Draw and explain the demand curve facing each firm, and given this demand curve, dose this mean that firms in the jeans do or do not compete against one another?
Answer
Demand curve
Explanation
The oligopoly is a