In: Economics
1.
Total revenue = Price × Quantity
= $2 × 1,800
= $3,600 (Answer)
2.
Total fixed cost = Total cost – Total variable cost
= 15700 – 7200
= $8,500 (Answer)
3.
Average variable cost = Total variable cost / Quantity
= 7200 / 1800
= $4 (Answer)
4.
Total cost for (Q – 1) should be calculated first.
(Q – 1) = 1800 – 1 = 1799 units
Total cost for 1799 units = Total fixed cost + Total variable cost
= 8,500 + ($4 × 1799)
= 8500 + 7,196
= $15,696
Marginal cost = Total cost for 1800 units – Total cost for 1799 units
= 15700 – 15696
= $4 (Answer)
5.
Answer: D
The price $2 doesn’t cover the average variable cost $4; therefore, this is the time to shutdown.