Question

1. Suppose your business prints invitations. You purchased a printer for $1000. 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) 30 100 1,000 Suppose the cost of labor per unit (per week) = $1000. Fixed cost (per week) = $500. The price of the product = $200. (6 pts.) Labor Marginal Product of Labor (MPL) Total Cost (TC) Total Revenue (TR) Marginal Revenue (MR) Profit (1) Output O How many units of output should be made?

Answer 1

Answer 1

Pages TC FC 0 30 90 VC 10000 1000 1000 150 1000 300 1000 3000 ATC 1000 1090 36.33 1150 23.00 1300 13.00 4000 4.00 50 100 1000

The purchase of the printer is the fixed cost and is not dependant on the number of pages printed.

Variable Cost = Pages x $3

Total Cost = Fixed Cost + Variable Cost

Average Total Cost = Total cost / Pages

Answer 2

Labor Output MPL TC TR T -500 900 1900 10 2 3 22 308 MR 0 2400 4400 6000 7200 8000 500 1500 2500 3500 4500 5500 2400 2000 1600 1200 800 2500 2700 5 40 4 2500

MPL = Output of X units of Labor - Output of (x-1) Unit of labor

Total Cost = 500 + (Laborx1000)

Total Revenue = 200 x Output

MR = Revenue of X units of Output - Revenue of (x-1) Unit of Output

Profit = Total Revenue - Total Cost

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