Question

need some help on these, thanks!

* 0103:13 Demand Data Price Od $7.00 6.50 5.85 5.35 4.90 4.508 Cost Data Output TC 3 $4.50 5.00 6.00 8.40 11.90 15.60 00 von What is the average total cost per unit to produce 6 units? Fill in the blank

Answer 1

(3) Average total cost = (Total cost / Quantity)

Total cost of producing 6 units of output is 8.40.

Average total cost = (8.40 / 6)

Average total cost = $1.4

The average total cost per unit to produce 6 units is $1.4.

Answer: $1.4

(1) A firm produces until a price is greater than the MC and maximize profit at P=MC

Price is $110 and the price is greater than MC at 2 units of output.

The AVC of producing 2 units of output is $150.

So we have the following.

Price = $110.

MC = $120

AVC = $150

The firm is not able to cover its AVC at 2 units of output implies a firm should shut down the production.

Answer: Option (A) i.e., shutdown.

Note: The firm will shut down the production if firm is not able to cover its variable cost in the short-run.