12. Problems and Applications Q6 Consider the following cost information for a p
ID: 1193881 • Letter: 1
Question
12. Problems and Applications Q6
Consider the following cost information for a pizzeria:
Quantity
Total Cost
Variable Cost
(Dozens of pizzas)
(Dollars)
(Dollars)
240
FILL IN THE BLANKS BELOW
The pizzeria’s fixed cost is $..................
Complete the third column of the following table by calculating the marginal cost per dozen pizzas using the information on total cost. Then complete the final column by calculating the marginal cost per dozen pizzas using the information on variable cost.
Quantity
Total Cost
Marginal Cost
Variable Cost
Marginal Cost
(Dozens of pizzas)
(Dollars)
Using Total Cost
(Dollars)
Using Variable Cost
(Dollars)
(Dollars)
True or False: It doesn’t matter whether you compute marginal cost using total cost or variable cost.
True
False
Quantity
Total Cost
Variable Cost
(Dozens of pizzas)
(Dollars)
(Dollars)
0 300 0 1 350 50 2 390 90 3 420 120 4 450 150 5 490 190 6 540240
FILL IN THE BLANKS BELOW
Explanation / Answer
(1)
Fixed cost is Total cost (TC) when Q (Output) is 0.
So, FC = $300
(2)
Marginal cost using TC = Change in TC / Change in Q
Marginal cost using VC = Change in VC / Change in Q
Calculations follow accordingly.
(3)
As the table shows. it doesn't matter if we compute MC using TC or VC.
TRUE.
Q TC MC (Using TC) VC MC (Using VC) 0 300 0 1 350 50 50 50 2 390 40 90 40 3 420 30 120 30 4 450 30 150 30 5 490 40 190 40 6 540 50 240 50Related Questions
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