Question

Answer the questions below on the basis of the diagram. Please show your work when calculating the values. o Cost per unit +

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Answer #1

a. Short run

There is AVC curve in the diagram above. there are fixed and variable cost in the short run only in the long run all costs are variable cost.

b. $5

from the AVC curve.

c. $8

from the ATC curve.

d. AVC at 9000, is $6

AVC = TVC/Q

TVC = AVC * Q

$6 * 9000 = TVC

TVC = $54000

e. ATC at 9000 units is $7

ATC = TC/Q

ATC * Q = TC

7 * 9000 = TC

TC = $63000

FC = TC - VC

FC = 63000 - 54000

FC = $9000.

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