Question

Suppose your business prints invitations. You purchased a printer for S1000. Paper costs you $3 a page. Fill in the following table (4 points) Number of Invitations (pages) Fixed Cost (FC) Variable Cost (VC) Total Cost (TC) Average Total Cost (ATC or AC) 100 1,000 Suppose the cost of labor per unit (per week) - S1000. Fixed cost (per week) - 5500. The price of the product - $200. (6 pes) Labor Marginal Product of Output Labor (MPU Total Cost (TC) Total Revenue (TR) Marginal Revenue (MR) Profit How many its of put should be made?

Answer 1

1.

Number of pages	FC	VC	TC	ATC
0	1000	0	1000	0
30	1000	90	1090	36.33333
50	1000	150	1150	23
100	1000	300	1300	13
1000	1000	3000	4000	4

FC= it dose not change with output. printer cost is fixed cost.

VC= 3 per page. so, vary according to made of invitation. so it is equal to cost per page multiply by number of pages.

TC=FC+VC

ATC=TC/number of invitation

2.

labor	output	MPL	TC	TR	MR	profit	MC
0	0		500	0		-500
1	12	12	1500	2400	200	900	83.33
2	22	10	2500	4400	200	1900	100
3	30	8	3500	6000	200	2500	125
4	36	6	4500	7200	200	2700	166.67
5	40	4	5500	8000	200	2500	250

how many unit of output should be made?

Answer: 36

explanation: firm can maximize its profit where MR=MC. here MR and MC are not equal at any quantity so firm will produce at quantity where MR is greater than MC before MC starts greater than MC. so it will produce 36 unit quantity.

MPL= change in quantity/change in labor

TC=FC+VC

FC=500

VC=1000 per labor

TR=price *quantity

MR=change in TR/change in quantity

profit= TR-TC

MC= change in total cost/change in quantity