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    ECON 101 - Chap. 5 - Costs of Production

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    Ali Ali Ali
    This document contains 6 practice problems from an economics textbook chapter on costs of production. Problem 1 asks the reader to calculate average total cost given a total product table. Problem 2 provides information on a company's fixed and variable costs to answer questions about total, average, and marginal costs. Problem 3 gives scenarios about a pizza shop's costs and revenues. Problem 4 asks the reader to fill in a cost table. Problem 5 provides financial information to calculate explicit, implicit, accounting, and economic profits. Problem 6 gives cost information to calculate total cost, average costs, and marginal cost for additional wine bottle production.

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    ECON 101 - Chap. 5 - Costs of Production

    Uploaded by

    Ali Ali Ali
    35 views3 pages
    This document contains 6 practice problems from an economics textbook chapter on costs of production. Problem 1 asks the reader to calculate average total cost given a total product table. Problem 2 provides information on a company's fixed and variable costs to answer questions about total, average, and marginal costs. Problem 3 gives scenarios about a pizza shop's costs and revenues. Problem 4 asks the reader to fill in a cost table. Problem 5 provides financial information to calculate explicit, implicit, accounting, and economic profits. Problem 6 gives cost information to calculate total cost, average costs, and marginal cost for additional wine bottle production.

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    ECON 101- Chap. 5_Costs of Production

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    This document contains 6 practice problems from an economics textbook chapter on costs of production. Problem 1 asks the reader to calculate average total cost given a total product table. Problem 2 provides information on a company's fixed and variable costs to answer questions about total, average, and marginal costs. Problem 3 gives scenarios about a pizza shop's costs and revenues. Problem 4 asks the reader to fill in a cost table. Problem 5 provides financial information to calculate explicit, implicit, accounting, and economic profits. Problem 6 gives cost information to calculate total cost, average costs, and marginal cost for additional wine bottle production.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    35 views3 pages

    ECON 101 - Chap. 5 - Costs of Production

    Uploaded by

    Ali Ali Ali
    This document contains 6 practice problems from an economics textbook chapter on costs of production. Problem 1 asks the reader to calculate average total cost given a total product table. Problem 2 provides information on a company's fixed and variable costs to answer questions about total, average, and marginal costs. Problem 3 gives scenarios about a pizza shop's costs and revenues. Problem 4 asks the reader to fill in a cost table. Problem 5 provides financial information to calculate explicit, implicit, accounting, and economic profits. Problem 6 gives cost information to calculate total cost, average costs, and marginal cost for additional wine bottle production.

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    You are on page 1of 3

    ECON 101- Freshman Economics

    Chapter 6: Costs of Production

    Problem 1
    Given the following total product table, assume that the firm uses 1 machine costing $25/day
    and pays its workers $25/day, calculate the average total cost of producing 15 units/day.

    Workers/day Output/day
    0 0
    1 4
    2 10
    3 13
    4 15
    5 16
    ____________________________________________________________________________
    ___________________________________________________________________________
    ____________________________________________________________________________
    ____________________________________________________________________________

    Problem 2

    a. What is Total Lube's total fixed cost?


    ______________________________________________________
    b. What is the total variable cost of 2 oil changes?
    ______________________________________________
    c. What is the average variable cost of 4 oil changes?
    ____________________________________________
    d. What is the average fixed cost of 2 oil changes?
    ______________________________________________
    e. What is the marginal cost of the 3rd oil change?
    ______________________________________________
    Problem 3

    Pizzas sell for $10 a pie.

    1. When the pizza shop employs 3 workers per day, it will have ________ of fixed cost.

    2. Three workers produce ____ pizzas per day, with a variable cost of ______per day.

    3. When the pizza shop employs 3 workers per day, it will experience ______ in total cost.

    4. When the pizza shop employs 2 workers per day, it will experience a marginal cost of______
    per pizza.

    5. When the pizza shop employs 5 workers per day, it will experience a marginal cost of______
    per pizza.

    6. When the pizza shop employs 3 workers per day, the pizza shop will collect total revenue of
    ______.

    Problem 4

    Fill in the blank spaces in the table below: (hint: you may need to add one more column to help
    you)

    Quantity TFC TVC ATC AFC AVC MC


    0 500 -- -- -- --
    1 20 20
    2 300
    3 133.3
    4 1,100 125
    Problem 5
    Suppose you manage a restaurant and earn $30,000 per year. You decide that you want to
    open your own restaurant and during the first year you have revenues of $100,000. Your
    expenses are $35,000 for salaries, $10,000 for supplies, $8,000 for rent, $2,000 for electricity
    bills and $5,000 for interest on a bank loan. Calculate the following:

    a. Explicit cost
    b. Implicit cost
    c. Accounting profit
    d. Economic profit

    Problem 6
    Let’s suppose you are making 50 bottles of wine per week. You know that your fixed costs add
    up to $300 and your variable costs amount to $900. You also know that if you were to make an
    extra 5 bottles of wine, your total cost would rise by $60. What is your total cost; average total
    cost; average fixed cost; average variable cost and marginal cost?

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