Question: Please show all work and graphs Consider a situation where a firm that produces compost is trying to figure out how its costs are structured.
Please show all work and graphs

Consider a situation where a firm that produces compost is trying to figure out how its costs are structured. No matter what, the firm must pay $100,000 per year in licensing fees to the state. On top of that, every units of compost produced requires storage costing $0.60, and the firm must pay a laborer $2. (a) Identify which costs are fixed, and which are variable. Explain your reasoning. (b) What is the total cost function? (c) From your result in part (b), derive the average total cost, average variable cost, average fixed cost function, and marginal cost. (d) Graph the curves found in part (c)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
