a. A firm’s fixed costs for 0 units of output and its average total cost of producing different output levels are summarized in the table below. Complete the table to find the fixed cost, variable cost, total cost, average fixed cost, average variable cost, and marginal cost at all relevant levels of output.

b. Suppose that the marginal product of the last worker employed by a firm is 40 units of output per day and the daily wage that the firm must pay is $20, while the marginal product of the last machine rented by the firm is 120 units of output per day and the daily rental price of the machine is $30. Show if the firm is using the cost-minimizing combination of labor and capital and give appropriate advice if necessary.

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(2) (3) (4) < (6) Average Average Average Variable (1) (5) (7) (8) Fixed - Variable- Total- Marginal- Quantitye Fixed Total- Cost Cost Cost Coste Cost Coste Cost FCe VCe TCe MC AFCe AVCe ATCe 15,000 100 300e 200 200 300 400 500 600 175e 225e 325e 400 (2) (3) (4) < (6) Average Average Average Variable (1) (5) (7) (8) Fixed - Variable- Total- Marginal- Quantitye Fixed Total- Cost Cost Cost Coste Cost Coste Cost FCe VCe TCe MC AFCe AVCe ATCe 15,000 100 300e 200 200 300 400 500 600 175e 225e 325e 400

Answer rating: 100% (QA)

a Quantity Fixed Cost Variable Cost Total cost Average fixed costs Average variable cost Average Tot... View the full answer