Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the formAVC = a + bQ + cQ2and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
If Straker Industries produces 20 units of output, what is estimated average total cost (ATC)?
A. $67.40
B. $117.40
C. $19.40
D. $1,348
Answer: B
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Under which of the following scenarios does an increase in the wage tax cause a drop in employment but no deadweight loss?
A. When the wealth effect for workers is larger than the substitution effect. B. When the wealth effect for workers is smaller than the substitution effect. C. When the wealth effect for workers is equal to the substitution effect. D. It is possible under any of these scenarios. E. There is no scenario under which this is possible.
The prices that people are willing to pay for goods and services mostly depend on:
a. the total utility derived from the goods and services. b. the marginal utility derived from the goods and services. c. the availability of raw materials for producing the goods and services. d. the cost of producing the goods and services. e. whether the goods are legal, since the laws affect the position of both supply and demand curves.
How is money destroyed in the banking system?
Assume the economy is at point D and it moves to a hypothetical point E located midway between points A and D. Which of the following would have to happen for the economy to move from point D to point E?
a. The price level would have to increase.
b. The price level would have to decrease.
c. Aggregate expenditure would have to increase.
d. Aggregate expenditure would have to decrease.