Chapter 13. The Costs of Production. Gregory Mankiw. Principles of Economics. 6-10 exercises. 7th edition
6. Consider the following cost information for a pizzeria:
b. Construct a table in which you calculate the marginal cost per dozen pizzas using the information on total cost. Also, calculate the marginal cost per dozen pizzas using the information on variable cost. What is the relationship between these sets of numbers? Comment.
7. Your cousin Vinnie owns a painting company with fixed costs of $200 and the following schedule for variable costs:
Calculate average fixed cost, average variable cost,
and average total cost for each quantity. What is the
efficient
scale of the painting company?
8. The city government is considering two tax proposals:
a. Which of the following curves—average fixed cost, average variable cost, average total cost, and marginal cost—would shift as a result of the lump-sum tax? Why? Show this in in a graph. Label the graph as precisely as possible.
b. Which of these same four curves would shift as a result of the per-burger tax? Why? Show this in a new graph. Label the graph as precisely as possible.
9. Jane’s Juice Bar has the following cost schedules:
a. Calculate average variable cost, average total cost, and marginal cost for each quantity.
b. Graph all three curves. What is the relationship between the marginal-cost curve and the average total-cost curve? Between the marginal-cost curve and the average-variable-cost curve? Explain.
10. Consider the following table of long-run total costs for three different firms:
Does each of these firms experience economies of scale or diseconomies of scale?
