Now suppose the decision maker in Technical Problem 6 faces a fixed cost of $24. Fill in the blanks in the following table to answer the questions below. AC is the average cost per unit of activity.

a. How does adding $24 of fixed costs affect total cost? Net benefit?b. How does adding $24 of fixed cost affect marginal cost?c. Compared to A* in Technical Problem 6, does adding $24 of fixed cost change the optimal level of activity? Why or why not?d. What advice can you give decision makers about the role of fixed costs in finding A*?e. What level of activity minimizes average cost per unit of activity? Is this level also the optimal level of activity? Should it be? Explain.f. Suppose a government agency requires payment of a one-time, nonrefundable license fee of $100 to engage in activity A, and this license fee was paid last month. What kind of cost is this? How does this cost affect the decision maker?s choice of activity level now? Explain.

Data From Problem 6

Fill in the blanks in the following table to answer the questions below.

TB TC NB MB MC $0 1 27 $35 2 65 10 3 85 30 51 14 60 20 | |