Microeconomics > QUESTIONS & ANSWERS > Review > Microeconomics__Cost_Curves Review. Questions and Answers. (All)

Review > Microeconomics__Cost_Curves Review. Questions and Answers.

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Cost Curves Review Review Questions 1. You may use a calculator for this problem only. Alicia’s Apple Pies is a roadside business. a. Calculate Alicia’s variable cost, average fixed cost, aver ... age variable cost, and average total cost as her daily pie output rises from 0 to 6. Quantity TC MC VC AFC AVC ATC 0 $9.00 --- --- --- --- 1 10.00 2 12.00 3 15.00 4 19.00 5 24.00 6 30.00 b. Does this firm benefit from specialization? Explain. c. What is Alicia’s minimum-cost output? Explain why making one more pie lowers Alicia’s average total cost when output is lower than the minimum-cost output. Similarly, explain why making one more pie raises Alicia’s average total cost when output is greater than the minimum-cost output. 2. Draw a correctly labeled graph showing a firm with a realistic “swoosh-shaped” MC curve and ATC, AVC, and AFC curves with their usual shapes. [Show More]

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