Read Chapter 5, “Production and Cost Analysis in the Short Run,” in Economics for Managers. As you read, think about what it costs you to do some basic task.
Download and review the Ch05.ppt PowerPoint file.
View the media: Costs of Production. This lecture presentation covers output and costs in the short run, deriving long-run average cost and firm profit maximization.
Assess data (in the table below) related to a small lawn mowing business.
Angela hires students at $40 a day to mow lawns.
Regardless of the number of students she hires, Angela leases five lawn mowers for $200 a day.
The following table gives the daily output: (Attached screenshot)
Write a one- to two-page paper that addresses the following. Be sure to show your calculations.
Construct the average fixed cost, average variable cost, and average total cost schedules.
Construct the marginal cost schedule.
Check that the gap between total cost and total variable cost is the same at all output levels. Explain why this relationship is so important and demonstrate clear insightful and critical thinking.
Cost of Production –
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