Ball Bearings, Inc. faces costs of production as follows:

a. Calculate the company€™s average fixed costs, average variable costs, average total costs, and marginal costs at each level of production.
b. The price of a case of ball bearings is $50. Seeing that she can€™t make a profit, the Chief Executive Officer (CEO) decides to shut down operations. What are the firm€™s profits/ losses? Was this a wise decision? Explain.
c. Vaguely remembering his introductory economics course, the Chief Financial Officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity. What are the firm€™s profits/losses at that level of production? Was this the best decision?Explain.

Transcribed Image Text:

Total Fixed Costs Total Variable Costs Quantity $100 100 100 100 100 100 100 0 50 70 90 140 200 360