Total Fixed Costs
Ball Bearings, Inc., faces costs of production as follows:
Quantity
Total Fixed Costs
Total Variable Costs
(Dollars)
(Dollars)
0 100 0
1 100 50
2 100 70
3 100 90
4 100 140
5 100 200
6 100 360
Complete the following table by calculating the companyâs total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production.
Quantity
Total Cost
Marginal Cost
Average Fixed Cost
Average Variable Cost
Average Total Cost
(Dollars)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
0
1
2
3
4
5
6
The price of a case of ball bearings is $50. Seeing that he canât make a profit, the company's chief executive officer (CEO) decides to shut down operations.
The firmâs profit in this case is $(Fill in the blanks with the dollar amount) (Note: If the firm suffers a loss, enter a negative number in the previous cell.)
True or False: This was a wise decision.
True
False
Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.
At this level of production, the firmâs profit is.$(fill in the blanks with the dollar amount) (Note: If the firm suffers a loss, enter a negative number in the previous cell.).
True or False: This is the best decision the firm can make.
True
False
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Ball Bearings, Inc., faces costs of production as follows:
Quantity
Total Fixed Costs
Total Fixed Costs
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