Question

In: Economics

Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled...

Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. 

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Answer the following questions: 

A) What is the marginal cost of creating the tenth instructional module in a given month? 

B) What is the average variable cost for the month if six instructional modules are produced? 

C) What is the average fixed cost for the month if nine instructional modules are produced? 

D) How many instructional modules are produced when the marginal cost is $1300? 

E) One month, Teacher's Helper produced 18 instructional modules. What was the average fixed cost for that month?


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Solutions

Expert Solution

Q FC VC TC=FC+VC= ATC(Q) AFC=FC/Q AVC=VC/Q ATC=TC/Q MC=Change in TC
0 (600+480)=1080 0 1080 - - - -
1 1080 400 (1080+400)=1480 1080 400 1480 (1480-1080)=400
2 1080 850 (965)(2)=1930 540 425 965 (1930-1480)= 450
3 1080 1350 2430 360 450 810 (2430-1930)=500
4 1080 1900 (1080+1900)=2980 270 475 745 (2980-2430)=550
5 1080 2500 (1080+2500)=3580 216 500 716 (3580-2980)=600
6 1080 (4280-1080)=3200 4280 180 533.33 713.3 700
7 1080 4100 (1080+4100)=5180 154.3 585.7 740 (5180-4280)=900
8 1080 5400 (1080+5400)=6480 135 675 810 (6480-5180)=1300
9 1080 7300 (1080+7300)=8380 120 811.1 922.2 (8380-6480)=1900
10 1080 (10880-1080)=9800 10880 108 980 1088 (10880-8380)=2500

(a) Marginal cost of creating the 10th instructional module = $2500.

(b) Average variable cost if six instructional modules are produced = $533.33.

(c) Average fixed cost if nine instructional modules are produced = 1080/9 = $120.

(d) When marginal cost = $1300 , then we can see from the above table that 8 instructional modules are produced.

(e) If 18 instructional modules are produced , then average fixed cost = 1080/18= $60.

Rahul Sunny answered 2 years ago
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