1) Consider the following costs of owning and operating a car. A $15,000 Ford Taurus financed over 5 years at 10 percent interest means a monthy payment of $ 318.17. Insurance costs $100 a month regardless of how much you drive. The car gets 20 miles per gallon and uses unleaded regualr that costs $1.50 per gallon. Finally suppose that wear and tear on the car costs about 15 cents a mile. Which costs are fixed and which are vairable? What is the marginal cost of a mile driven? In deciding whether to drive from New York to Pittsburg ( about 1,000 miles round trip_ to visit a boyfriend/girlfriend, which costs should be considered/ Why?

Create an excel spreadsheet for this answer.

2) True or False why?

a) For a competitive firm facing a market price above average total costs. the existence of economic profit meand the firm should increase output in the short run even if price is below marginal cost.

b) If marginal cost is rising with increasing output average cost must also be rising.

c) Fixed costs is constant at ecery level of output except zero. When a firm produces no output fixed costs are zero in the short run.

... is to keep in contact with your cus- behavior and on identifying variable and fixed costs. ... Thus, at the zero volume level, total cost equals the fixed costs. ...

... totter to be installed in the office b. Requires the firm to have only variable costs c. Increases the breakeven level d. Eliminates all fixed costs e. None of ...

... c. What is the firm's fixed costs? d. What is the wage rate? ... This Total Cost (STC) was consisting of only the Fixed Costs. Hence, the firm's fixed costs is 12. ...

... a. Graph the fixed cost, variable cost total cost curves for these data. ... a. Graph the fixed cost, variable cost total cost curves for these data. ...

... TR = P x Q = (96.5)(268,000) = 25,862,000 So, from the equation, Total Profit, II = TR - TC = 25,862,000 - [(Fixed Cost) + (MC) Q*] = 25,862,000 - [600,000 ...

... these costs, which are variable, fixed and mixed and then creates a contribution margin analysis, breakeven, target profit and incremental fixed costs analysis ...