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Question

Douglas Fur is a small manufacturer of fake-fur boots in Chicago. The following table shows the company’s total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity (Pairs) Fixed Cost (Dollars) Variable Cost Average Variable Cost Average Total Cost (Dollars) (Dollars per pair) (Dollars per pair) u AWNO Total Cost Marginal Cost (Dollars) (Dollars) 60 160 220 270 340 450 630 On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $160, so you should start your ATC curve by placing a green point at(1, 160). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $100, so you should start your MC curve by placing an orange square at (0.5, 100).) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. COSTS (Dollars per pair) QUANTITY (Pairs of boots)

Answer “Douglas Fur is a small manufacturer of fake-fur boots in Chicago. The following table shows the…”.

Production Schedule

To determine the costs of producing different output levels, manufacturers can create cost schedules. These costs can be used by manufacturers to determine production costs that will maximize profits.

Total cost:

Total cost is the total cost incurred by a company to produce the final product for the market. It is a sum of the fixed and variable costs of production.

Average Variable cost

The average variable cost (AVC), is the sum of the total variable costs and output levels. It’s a U-shaped curve. It is the difference between AC and AFC.

Answer:

The formula is used to complete the table:

MC (Marginal Cost) = Total cost (n) – Total cost (n-1)

Fixed Cost = Total cost – Variable cost

Variable cost = Total cost – Fixed cost

Average Variable Cost = Variable cost / quantity

Average Total Cost = Total cost / Quantity

Last words

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