The total cost of producing one unit of output is $200; two units cost $300, three units $450, and four units $800. Fixed cost is $50. Draw the associated total cost, average cost, and marginal cost curves, placing total cost on one graph and marginal and average cost on a second graph.
What will be an ideal response?
Total cost will rise slowly at first and then more quickly after Q = 2 (Figure 8-6). Average cost is U-shaped, with a flat portion in the U between Q = 2 and 3. Marginal cost is U- (or J) shaped, reaching a minimum of $100 for the second unit. This point should be plotted at Q = 1.5. MC rises to $150, plotted at Q = 2.5, where it intersects AC. MC rises quickly to $350 at Q = 3.5.
Figure 8-6
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Economics
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Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________
A) decreases; negative B) increases; negative C) increases; positive D) decreases; positive
Economics
The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?
A) less than $27 per game B) $27 per game C) more than $27 per game. D) More information is needed to determine if the price is more than, less than, or equal to $27 per game.
Economics