BU224 Unit-6

| July 29, 2018

BU224 Unit 6

Quantity of Boats Total Cost
0 $ 450,000
1 $ 490,000
2 $ 510,000
3 $ 520,000
4 $ 540,000
5 $ 570,000
6 $ 610,000
7 $ 670,000
8 $ 750,000
9 $ 870,000

1. What is this manufacturer’s fixed cost?

2. For each level of output, calculate the variable cost (VC). For
each level of output except zero output, calculate the average variable
cost (AVC), average total cost (ATC), and average fixed cost (AFC)

Qty of boats Total Cost Variable Costs
(a.) Average Variable Costs
(b.) Average Total Costs
(c.) Average Fixed Cost
(d.)
0 $450,000 – – – –
1 490,000
2 510,000
3 520,000
4 540,000
5 570,000
6 610,000
7 670,000
8 750,000
9 870,000

3. What is the minimum-cost output?
4. For each level of output, calculate this manufacturer’s marginal cost (MC)
(For convenience, place the Marginal Cost between 0 and 1 boat on the
second row, the Marginal Cost between 1 and 2 boats on the third row,
and so on)

Qty of boats TC Marginal Costs
0 $450,000 –
1 490,000
2 510,000
3 520,000
4 540,000
5 570,000
6 610,000
7 670,000
8 750,000
9 870,000

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