Online homework

This is an opportunity for you to practice the concepts we are learning in class.
Feel free to use a calculator and/or a pencil and paper to do the necessary calculations, but please submit your answers electronically.

Your section Your name (required)Your four-digit identifier in this class (required)

The table below provides information about costs of a firm .

Output
(Q)
AFC, $
AVC, $
1
50.00
100.00
2
25.00
80.00
3
16.67
66.67
4
12.50
65.00
5
10.00
68.00
6
8.33
73.33
7
7.14
80.00
8
6.25
87.50

Useful formulas:

TC = FC + VC
ATC = AFC + AVC
AFC = FC / Q
AVC = VC / Q
ATC = TC / Q
FC = AFC * Q
VC = AVC * Q
TC = ATC * Q


Answer the following questions. As you do that, keep in mind the difference between "variable cost" and "AVERAGE variable cost", etc.
Round all your answers to the nearest dollar.

1. How large is this firm's fixed cost?
$25
$50
$100
$150
None of the above; the correct answer is $ .

2. As the firm increases its output, what happens to its fixed cost?
It increases.
It decreases.
It stays the same.
It first increases, then decreases.

3. As the firm increases its output, what happens to its variable cost?
It increases.
It decreases.
It stays the same.
It first increases, then decreases.

4. If the firm closes down and produces no output, what will be its variable cost?
$0
$40
$50
None of the above; the correct answer is $ .
I have no idea.

5. If the firm closes down and produces no output, what will be its total cost?
$0
$40
$50
None of the above; the correct answer is $ .
I have no idea.

6. If the firm produces five units, what is its average total cost?
$39
$50
$68
$78
None of the above; the correct answer is $ .

7. What is the firm's variable cost of producing five units?
$68
$78
$340
$350
None of the above; the correct answer is $ .

8. What is the firm's total cost of producing five units?
$78
$115
$310
$390

None of the above; the correct answer is $ .

9. If the firm increases its output from 5 to 6 units, by how much will its total cost increase? (The proper name for such an increase is "marginal cost".)
by $4
by $100
by $130
by $390
None of the above; the total cost will increase by $ .

10. What is the "marginal cost" of the 7th unit of output?
$7
$80
$120
$560
None of the above; the MC of the 6th unit is $ .


11. Your friend is looking into buying a printer for her home office and turns to you for advice. She is choosing between a laser printer and an inkjet printer, both printing in black-and-white. Both produce printouts of acceptable quality. The laser printer is more expensive than an inkjet one but it is also faster, and laser toner cartridges tend to last longer than ink cartridges.
What advice would you give your friend regarding the type of printer she should buy?

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