Question

1. A business firm produces and sells specialty cakes. Last year, the firm produced 12,000 cakes and sold each cake for $20. In producing the 12,000 cakes, it incurred variable costs of $150,000 and a total cost of $183,000. Which of the following statements is (are) correct?
(x) The firm’s economic profit for the year was more than $51,250 but less than $54,375.
(y) Fixed costs amounted to $33,000 and average fixed costs are $2.75 per unit for 12,000 cakes.
(z) In producing the 12,000 specialty cakes, the firm’s average variable cost was more than $12.25 per cake and its average total cost was less than $15.75 per cake.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only E. (y) only

2. Which of the following statements is (are) correct?
(x) If marginal cost is $10 and rising, average variable cost could be either greater than or less than $10.
(y) If you know the average variable cost of 75 units then you have sufficient information to calculate the marginal cost of the 75th unit.
(z) If you know the average fixed cost of 600 units then you have sufficient information to calculate the average fixed cost of 400 units.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only

Answer 1

Ravenes 12000x2o - 240,00 Piced Cost TC-VC 183 o00-so000 Boa0 AFCE Pe 33 000 12000 Cesnonic ProfN 2400OC1 193o00 7000 AUC 1S0009 20000 AC I83000 9.18 183 20000S Aus is E cre Sr AUCeant etan ater or Smallr.(X MCamstLcalkte 2 AF600 isna 400 X 6 00