# a couple econ questions I need verified

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Thefollowing table provides limited information about your costs. Average total cost for a given quantity of output

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is obtained by adding total fixed cost and total variable cost at that level of output and then dividing by the quantity
of output. Remember that your company’s total fixed cost is \$180,000.

Quantity
Raw Materials

CostLabor

Cost

Total Variable

Cost Total Cost
Average Total

Cost

1 \$20,000 \$140,000 ? ? ?
2 \$40,000 \$260,000 \$300,000 ? ?
3 60,000 360,000 420,000 ? ?
4 80,000 480,000 ? ? ?
5 100,000 620,000 ? ? ?
6 ? 780,000 900,000 ? ?
7 140,000 960,000 1,100,000 ? ?
8 160,000 ? 1,320,000 ? ?
9 180,000 1,380,000 1,560,000 ? ?
10 200,000 1,620,000 ? ? ?

6.

What is the average total cost if you build three homes?

Now assume that you are considering expanding your company by buying more capital goods (buildings, machines,
and tools). If your company were larger (meaning that it had more capital goods), total fixed cost would increase
from \$180,000 to \$210,000. However, labor costs would decrease because the capital goods that you purchased
would reduce your need for workers. Therefore, your total variable cost would decrease by \$5,000 per home, as
shown in the table.

QuantityTotal Variable CostTotal Fixed CostTotal Cost

0 — \$210,000 \$210,000
1 \$155,000 210,000 365,000
2 290,000 210,000 500,000
3 405,000 210,000 615,000
4 540,000 210,000 750,000
5 695,000 210,000 905,000
6 870,000 210,000 1,080,000
7 1,065,000 210,000 1,275,000
8 1,280,000 210,000 1,490,000
9 1,515,000 210,000 1,725,000
10 1,770,000 210,0001,980,000

8.1.

Calculate the new average fixed cost if you build seven houses.

\$

Please enter a whole number, with no decimal point.

Now assume that you are considering expanding your company by buying more capital goods (buildings, machines,
and tools). If your company were larger (meaning that it had more capital goods), total fixed cost would increase
from \$180,000 to \$210,000. However, labor costs would decrease because the capital goods that you purchased
would reduce your need for workers. Therefore, your total variable cost would decrease by \$5,000 per home, as
shown in the table.
QuantityTotal Variable CostTotal Fixed CostTotal Cost
0 — \$210,000 \$210,000
1 \$155,000 210,000 365,000
2 290,000 210,000 500,000
3 405,000 210,000 615,000
4 540,000 210,000 750,000
5 695,000 210,000 905,000
6 870,000 210,000 1,080,000
7 1,065,000 210,000 1,275,000
8 1,280,000 210,000 1,490,000
9 1,515,000 210,000 1,725,000
10 1,770,000 210,0001,980,000

8.2.

Calculate the new average total cost if you build 10 houses.

Please enter a whole number, with no decimal point.

Now assume that you are considering expanding your company by buying more capital goods (buildings, machines,
and tools). If your company were larger (meaning that it had more capital goods), total fixed cost would increase
from \$180,000 to \$210,000. However, labor costs would decrease because the capital goods that you purchased
would reduce your need for workers. Therefore, your total variable cost would decrease by \$5,000 per home, as
shown in the table.
QuantityTotal Variable CostTotal Fixed CostTotal Cost
0 — \$210,000 \$210,000
1 \$155,000 210,000 365,000
2 290,000 210,000 500,000
3 405,000 210,000 615,000
4 540,000 210,000 750,000
5 695,000 210,000 905,000
6 870,000 210,000 1,080,000
7 1,065,000 210,000 1,275,000
8 1,280,000 210,000 1,490,000
9 1,515,000 210,000 1,725,000
10 1,770,000 210,0001,980,000

8.3.

If you decide to expand, you will have higher capital costs but lower labor costs.
Which quantity of houses can you produce more cheaply if the company is larger?

A. 4

B. 3

C. 2

D. 7

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