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average variable, average fixed,& average total cost in the short run

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The engineers at Tools, Inc have derived the expansion path shown in the attached spreadsheet. The price of labor is $100 per unit.

1.What price does Tools, Inc pay for capital?

2.If the owner decides to produce 180 units of output, how much labor and capital should be used in order to minimize total cost?

3.What is the total cost of producing 120, 180, & 240 units of output in the long run?

4.Tools, Inc originally built the plant (i.e., purchased the amount of capital) which was designed to produce 180 units optimally. In the short run with capital fixed, if the owner decides to expand production to 240 units, what is the amount of labor & capital that will be used? (Hint: How much must the firm expand output in the short run when capital is fixed?)

5.Given the answer to the above question, calculate average variable, average fixed,& average total cost in the short run.

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Calculate average variable, average fixed,& average total cost in the short run.

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