FLOW 7:51 PM https://elearn.monroecollege.edu Graduate School MONRDECOLLEGE MBA Master in Business Administration Program MG 640 Managerial Economics Homework Assignment Chapter 5: Production Process and Costs INSTRUCTIONS Use this Home Work Question sheet to write your answers and show all steps. Don\'t change the questions nor attach separate work sheets. Don\'t put your name Answer the following questions: Question Cost functions, a part of the defimition of profit, are useful to gauge the perfomance of the business Suppose an economist estimated that the cost function of a single-product firm as CIO)-10+100+ 100+100 Based on this information, determine the followings and show alll steps (first, you must define each of the terms in the cos function, and then plug in the mumbers to have your answers; nor jusll the answers) Hit THE use of Graphs is rccommended a. Define fised cost and ofer an cxample. Next, compute the ised cost of prodacing 20 b. Define variable cost and offer an example. Nest compule the yariable co of e. Define total cost and then compute the total cost of producing S units of output using d. Define and computle the average fived co of producing 5 units of output T Define and compute the aneraps total cost of producing S units of output units of output using the cost function above producing $units ofoutput using the cost function above the cost function above g Define marginal cost an offer an example. Next, compute the marginal cwhen - 5, using the cost function above Qerstion 2 A firm\'s fised costs foe producing 0 units of output and its average total cost of producing different output levels are summarized in the tale below Complete the table to find the fised cost, variable co, total cost, average fixed cost average variable cost, and marginal cost at all levels of output. O FC VC TCAFCAVCATCMC 0 S100 10 20 25 15 12 17 29 37 50 Homework is due in the weekly Deop Box by Saturday Spm Send homework as a Word attachment or copy and paste in the Deop Bo
1. a) Fixed cost is the cost of firm at zero level of output.
Fixed cost = 10 + 10(0) + 10(0)2 + 10(0)3 = 10
Fixed cost of producing any unit of output is $ 10.
So, fixed cost of producing 20 units is also $ 10.
b) Variable cost is the cost which changes with the change in output. It increases with increase in output and vice-versa.
Variable cost = 10Q + 10Q2 + 10Q3
VC of producing 5 units = 10 x 5 + 10(5)2 + 10(5)3 = 50 + 250 + 1250 = 1550
c) Total cost is the sum of fixed cost and variable cost.
TC = TFC + TVC = 10 + VC of 5 units is 1550 (as calculated above) = 10 + 1550 = 1560
d) AFC = TFC/Q = 10/5 = 2
e) AVC = TVC/Q = 1550/5 = 310
f) ATC = TC/Q = 1560/5 = 312
g) MC is the additional total cost of producing one more unit of output.
MC = dTC/dQ = 0 + 10 + 20Q + 30Q2 = 10 + 20Q + 30Q2
MC of 5 units = 10 + 20(5) + 30(5)2 = 10 + 100 + 750 = 860
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