Question

Chapter 9 Cost and Productivity Exercises

The following problems are designed to help with the relationship between the costs and productivity measures. Answer each question separately because it does not depend on the other answers.

1. If Bill’s Pizza Parlor can serve 30 tables with 3 waiters and 35 tables with 4 waiters, the marginal product of the fourth waiter is ( ).

2. If Clean Ft. Myers garbage collection company employs 2 workers on a garbage truck and they pick up 200 cans of trash, the average product of labor is ( ).

3. If a Bill’s total fixed cost (TFC) is $100 and its total variable cost (TVC) is $200 when it produces 20 pizzas, its average total cost (ATC) is ( ).

4. If ATC is $5 and AVC is $2, the AFC is ( ).

5. If average variable cost (AVC) is $5 when Bill’s produces 30 pizzas, its total variable cost is ( ).

6. If Bill’s total fixed cost (TFC) is $350 when it produces 5 pizzas, its total fixed cost when it produces 6 pizzas is ( ).

7. If Bill’s total fixed cost (TFC) is $200 when he produces 40 pizzas, its average fixed cost (AFC) is ( ).

8. If Bill’s average variable cost (AVC) is $100 when he produces 5 pizzas and his total fixed cost (TFC) is $100, his total cost (TC) is ( ).

9. If The Burger Palace sells 25 hamburgers and its total costs are $75, its per-hamburger cost is ( ).

10. If FSW’s total variable cost (TVC), such as professors’ salaries and dry erase markers, is $6,000,000 when it has 1,000 students and the total fixed costs (TFC), such as buildings, is $1,000,000, the per-student total cost is ( ).

Answer 1

ANSWER (1) Marginal product - Change in total product Change in Input Me of 4th worker – 35-30 4-3 5 Table (2) Average product - Total product Input Average product in 100 mit (3) TFC2 $/od , TVC = $ 200 , Output: 20 TCF TreeTVC 100 + 200 - Tc = $300 AT CF TE P zools 20 ATC= $15

(4 ATC2 85 AVC= $2. Afee ATC- AVC a a 5-2 $3 AFC (6) Ave- 85 output 30 units of Pizzas TVC AUCXO SX30 $150 TUC = (6) TFC= 350 when = s pizzas THEF $3.50 when des Pizzas because fixed cost remaining the same at any lever of output Even when output is zero. (7) TFC= $200 Q 40 Pizzas AFC TFC - 2001 Afc u 15 (8 AVC= $100 Q = 5 Pizzas TFC - $100 TC TAC + TVC

TVC= AUCxQ - 100x5 = $500 TC- Soot100 Tea $600 (9) Q- 25 hamburgers. Total cost - $75 Average cost- 75 - TC 25 $3 Average cost = when 1000 students $6,000,000 (10) TVC= THE $ 1,000,000 Tre Tvo TCa 1,000,000 + 6,000,000 TC - $71000000 total coste Toted cost per student Number of student 7,000/000 000 $7000 so per student total cost -