# Costs and Total Variable Cost

Explain in a nontechnical way why demand iselastic in the northwest segment of the demand curve and inelastic in the southeast segment. Product PriceQuality Demanded $51 Vb 42 33 24 15 Answer: 1/1. 5 / ?. 5= . 67%/ 22%= 3. 05 Ch 22 #7 1. Key Question A firm has fixed costs of $60 and variable costs as indicated in the table on the following page. Complete the table and check your calculations by referring to question 4 at the end of Chapter 23. 1. Graph total fixed cost, total variable cost, and total cost. Explain how he law of diminishing returns influences the shapes of the variable-cost and total-cost curves Graph AFC, AVC, ATC, and MC. Explain the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain in nontechnical terms why the MC curve intersects boththe AVC and the ATC curves at their minimum points. Explain how the location of each curve graphed in question 7b would be altered if (1) total fixed cost had been $100 rather than $60 and (2) total variable cost had been $10 less at each level of output.

Total Product Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 0$__60_ $0$___ $___ $___ $___ $___ 1 60 45 105 60 45 105 45___ 2 60 85145 120 170 290230 3 60120180 180 390 510450 4 60150 210 840 6001,4401380 5 60185245 1225 925 46254565 6 60225285 360135017101650 7 60270330 420 189023102250 8 60325385 480 260030803020 9 60390450 5403510 4050 3990 10 60465525 600 465052505190 Ch8 #2 Key Question Suppose an economy’s real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP?

Assume that population is 100 in year 1 and 102in year 2. What is the growth rate of GDP per capital? 30,000/1 / 31,2000/1=(305. 9/300=-1 or 31,2000/30,000 -1= . 00186 #11Key Question If the CPI was 110 last year and is 121 this year, what is this year’s rate of inflation? What is the βrule of 70β? How long would it take for the price level to double if inflation persisted at (a) 2, (b) 5, and (c) 10 percent per year? (121/110-1)=-0. 1 or 121-110=11 110/11=0. 9-1=-0. 9 Ch3 E3. 6 A. Firm D has net income of $27,900, sales of $930,000, and average total assets of $465,000. Calculate the firm’s margin, turnover, and ROI. 7,900/930,00 =0. 3 0. 3/465000= 6. 45 B. Firm E has net income of $75,000, sales of $1,250,000, and ROI of 15%. Calculate the firm’s turnover and average total assets. 75,000/1,250,000= 0. 06 0. 06/15%= 0. 9 C. Firm F has ROI of 12. 6%, average total assets of $1,730,159, and turnover 2b2 1. 20n-15n-5,000=0/5n-5,000=0 5n/5=5,000/5 n=1,000 2. 30,000/40,000=0. 75 s-0. 75-7,500=0 0. 253=7,500 s=30,000 3. 7000=30x-33,000-14q 33,000+7000=30x-33,000-14q+33,000 40,000/16-16/16=2,5000 4. 40q-80,000-30q 20,000=4q-80,000*(1. 1)-30*(. 8) 88,000+20,000=4q-88,000-24q 108,00/16=40-24=16 108,00/16 16/16=6,750