QUESTION 1

General Information:This question has 12 blank spaces.21 points in total.

Instructions:Report all monetary values up to 2 decimal places.Do not use any commas.Where applicable, use only the words/phrases provided inred

Consider that a firm is currently producing (and selling) 10,000 units of output per week.At this quantity, the firm's average total cost is $28, its marginal cost is $20 and its average variable cost is $20.

1.What is the firm total fixed cost?(4 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank space provided.

The firm's total fixed cost is $_______

2.What can one say about the firm's average total cost?(3 points)

Complete the sentences by entering one of the following phrases or a numerical value (0.00 is acceptable) in the blank space provided:

in the first blank space:is equal to|is greater than|is less than

in the second blank space:average fixed cost|average variable cost|marginal cost

in the third blank space:is at a maximum|is at a minimum|is decreasing|is increasing

The firm's average total cost _______the firm's ________, and so we can say the firm's average total cost________with output.

3.What can one say about the firm's average variable cost?(3 points)

Complete the sentences by entering one of the following phrases or a numerical value (0.00 is acceptable) in the blank space provided:

in the first blank space:is equal to|is greater than|is less than

in the second blank space:average fixed cost|average total cost|marginal cost

in the third blank space:is at a maximum|is at a minimum|is decreasing|is increasing

The firm's average variable cost ________the firm's_________and so we can say the firm's average variable cost________with output.

4.What is the firm's total variable cost?(2 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank spaces provided.

The firm's total variable cost is $_____.

5.If labor is the only variable input, and the wage rate is $160 per week, how many workers are hired?(3 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank spaces provided.

With the wage rate of $160, the firm is currently hiring_______workers.

6.If wages increase, what impact should the firm expect in the short run?(6 points)

Complete the sentence by entering one of the following phrases in the blank space provided (phrases may be used more than once):

in the first, second and third blank space:a decrease|an ambiguous change|an increase|no change

In the short run, an increase in wages would lead to________in the firm's total fixed cost, ___________in the firm's total variable cost and__________in the firm's marginal cost.