The following cost functions apply to X Company's regular production and sales during the year:

  Cost of goods sold:   $5.41 (X) + $122,760

  Selling and administrative expenses:   $1.43 (X) + $67,580

where X is the number of units produced and sold. During the year, X Company sold 62,000 units for $17.00 each. At the end of the year, a company offered to buy 4,230 units but was only willing to pay $11.00 each. X Company had the capacity to produce the additional 4,230 units.

5. If X Company had accepted the special order, firm profits would have increased by $17,597

6. Consider the following three changes. Direct material costs on the special order would have increased by $0.79 per unit, direct labor costs on the special order would have decreased by $0.38 per unit, and X Company would have had to rent special equipment for $1,000. Independent of your answer to (5), the effect of these changes would have been to reduce profit on the special order by $2,734

7. In order to retain all of X Company's regular customers, it would have had to reduce the regular selling price by $0.50. If the selling price were reduced and next year's unit sales turned out to be the same as this year's sales, firm profits would have fallen by

Find the cost function if the marginal cost function is given by C' (x) = x^1/3 +9 and 27 units cost ​$415.

C(x) =

Jane's Juice Bar has the following cost schedules:

In the following table, complete the marginal cost, average variable cost, and average total cost columns.

On the following graph, use the orange points (square symbol) to plot the marginal-cost curve for Jane's Juice Bar. (Note: Be sure to plot from left to right and to plot between integers. For example, if the marginal cost of increasing production from 1 vat of juice to 2 vats of juice is $5, then you would plot a point at (1.5, 5).) Then use the purple points (diamond symbol) to plot the average-variable cost curve starting at 1 vat of juice, and use the green points (triangle symbol) to plot the average-total-cost curve also starting at 1 vat of juice.

Marginal CostAverage Variable CostAverage Total Cost01234564035302520151050CostsQuantity (Vats of juice)6, 25

Which of the following statements are true according to the previous graph? Check all that apply.

The marginal-cost curve is below the average-total-cost curve when output is less than four and average total cost is declining.

The marginal-cost curve is below the average-total-cost curve when output is greater than four and average total cost is rising.

The marginal-cost curve lies above the average-variable-cost curve.

1. A company has fixed cost of $45,000, variable cost per unit of $11, and sells its product at $18 each.

a) What quantity must the firm sell in order to break-even? Explain how you reached this conclusion.

b) What is the firm's total revenue at the break-even level of output? Show your calculation.

c) What is the firm's total variable cost at the break-even level of output?

d) What quantity must the firm sell in order to make a profit of $62,000? Explain how you reached this conclusion.

8. The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair.

Instructions: In part a, enter your answer as the closest given whole number.

a. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce?

      pairs

Instructions: In parts b-d, round your answers to 2 decimal places.

b. At the profit-maximizing quantity, what is the total cost of producing ear buds?

     $

c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?

     $

d. If the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?

     $

e. Buddies earns a normal profit when

marginal cost equals average cost at the minimum of average cost.

marginal cost equals average cost.

marginal cost equals marginal revenue at the minimum of marginal cost.

average cost equals average revenue at the minimum of average cost.

10. If a purely competitive firm shuts down in the short run,

it will realize a loss equal to its total variable costs.

it will realize a loss equal to its explicit costs.

it will realize a loss equal to its total fixed costs.

its loss will be zero.

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children’s mittens in a competitive market.

Smitten's Production Costs

Instructions: In part a, enter your answer as a whole number. In parts b–d, round your answers to two decimal places.

a. If the market price of children’s mittens is $6.00 per pair, how many pairs of children’s mittens should Smitten produce per week to maximize its profits?

     pairs of mittens

b. What is Smitten’s average total cost at the profit-maximizing quantity of children’s mittens?

   $

c. What are Smitten’s weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens?

   $

d. What are Smitten’s weekly profits if the market price is $5.50 per pair and the firm produces the profit-maximizing quantity of mittens?

     $

e. The price at which Smitten would earn a normal profit is where:

• average cost equals average revenue at the minimum of average cost.

• marginal cost equals average cost.

• marginal cost equals average cost at the minimum of average cost.

• marginal cost equals marginal revenue at the minimum of marginal cost.

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children’s mittens in a competitive market.

Smitten's Production Costs

Instructions: In part a, enter your answer as a whole number. In parts b–d, round your answers to two decimal places.

a. If the market price of children’s mittens is $6.00 per pair, how many pairs of children’s mittens should Smitten produce per week to maximize its profits?

________ pairs of mittens

b. What is Smitten’s average total cost at the profit-maximizing quantity of children’s mittens?

   $ ________

c. What are Smitten’s weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens?

   $ ________

d. What are Smitten’s weekly profits if the market price is $5.50 per pair and the firm produces the profit-maximizing quantity of mittens?

     $ ________

e. The price at which Smitten would earn a normal profit is where:

• marginal cost equals average cost.

• marginal cost equals marginal revenue at the minimum of marginal cost.

• marginal cost equals average cost at the minimum of average cost.

• average cost equals average revenue at the minimum of average cost.

Assume the following cost data are for a purely competitive firm:

1. At a product price of $56, will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Explain. What economic profit or loss will the firm realize per unit of output.
2. Answer the relevant questions of (i) assuming product price is $41
3. Answer the relevant questions of (i) assuming product price is $32
4. Which will be the price the company will have to confront in the long run, assuming freedom to entry and exit and identical costs for all players?  (Hint: remember the long-run ATC curve)