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Chapter#7 Cost Theory and Analysis Solution

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MANAGEIAL ECONOMICS (H.CRAIG PETERSEN, W.CRIS LEWIS)

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CHAPTER#7 COST THEORY AND ANALYSIS

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SOLUTION

PROBLEMS
7-1
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Y=A+BX

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We can calculate total cost by the method of linear regression with the help of financial
calculator.

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TC=1000+80Q

Tw eet

TFC=1000
TVC=80Q
AVERAGE TOTAL COST=TC/Q
TC= (1000+80Q)/Q
ATC=1000/Q+80
AVERAGE FIXED COST=TFC/Q
AFC=1000/Q
AVERAGE VARIABLE COST=TVC/Q
80Q/Q=80
Search This Document

SearchMC=CHG TC/CHG Q
Search
History:
RATE
OF OUTPUT
0
Searching...
Result 00 of 00 2
4
00 results for result 7for
10

p.

TOTAL COST
1000+80(0)=1000
1000+80(2)=1160
1000+80(4)=1320
1000+80(7)=1560
1000+80(10)=1800

MARGINAL COST
80
80
80
80

7-2

Y=A+BX
FC=5000
We can calculate total variable cost by the method of linear regression with the help of financial
calculator.

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Chapter#7 Cost Theory and Analysis Solution


TC=5000+1000Q
AVERAGE TOTAL COST=TC/Q
TC= (5000+1000Q)/Q
ATC=5000/Q+1000
AVERAGE VARIABLE COST=TVC/Q
1000Q/Q=1000
MC=CHG TC/CHG Q
RATE OF OUTPUT
1
2

TOTAL COST
5000+1000(1)=6000
5000+1000(2)=7000

MARGINAL COST
1000

3
4
5

5000+1000(3)=8000
5000+1000(4)=9000
5000+1000(5)=10000

1000
1000
1000

7-3

TC=200+5Q-0.04Q^2+0.001Q^3
MC=5-0.08Q+0.003Q^2
a) ATC , AVC , AFC , FC
FC=200
AVERAGE TOTAL COST=TC/Q
(200+5Q-0.04Q^2+0.001Q^3)/Q
ATC=200Q^-1+5-0.04+0.001Q^2
AFC=200Q^-1

AVERAGE VARIABLE COST=TVC/Q


(5Q-0.04Q^2+0.001Q^3)/Q
AVC=5-0.04Q+0.001Q^2
b) AVC=MC
5-0.04Q+0.001Q^2=5-0.08Q+0.003Q^2
0.04Q-0.002Q^2=0
Q(0.04-0.002Q)=0
0.04=0.002Q
Q=20
C) IF FC=500 THE RESULT WOULD BE SAME
7-4

TR=50Q
TC=10000+30Q
A) TR=TC
50Q=10000+30Q
Q=500
B) Q=FC+PROFIT/P-AVC
10000+20000/50-30
Q=1500
7-5
TFC=20, P=10, PROFIT=2

A) BREAKEVEN OUTPUT=FC/P-VC
CM=P-VC
2=10-VC
VC=8
BREAKEVEN OUTPUT=20/10-8=10
B) PROFIT ELASTICITY=Q(P-VC)/Q(P-VC)-TFC
20(10-8)/20(10-8)-20

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Chapter#7 Cost Theory and Analysis Solution


20(10-8)/20(10-8)-20
40/20

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Chapter#7 Cost Theory and Analysis Solution

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Chapter#7 Cost Theory and Analysis Solution

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Chapter#7 Cost Theory and Analysis Solution

Chapter#7 Cost Theory and Analysis Solution


MANAGEIAL ECONOMICS (H.CRAIG PETERSEN, W.CRIS LEWIS)CHAPTER#7 COST THEORY AND ANALYSISSOLUTION
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W.CRIS LEWIS) CHAPTER#9 PERFECT COMPETITION AND MONOPOLY SOLUTION PROBLEMS\n9-1 QS=20000+30P QD=40000-20P B) QS=QD
20000+30P=40000-20P 50P=20000 P=400 Q=20000+30(400) Q=32000 C) QS=20000+30P QD=50000-20P QS=QD 20000+30P=50000-20P 50P = 30000 P=600
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Umer Bhutta15 days ago
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Can Any one Email This Chapter Umer9129@gmail.com

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