## (Solved) Table 1. shows the hourly production and Total Cost estimates for a new manufacturing firm wishing to enter the smart phone market. Fill in the...

2. Table 1. shows the hourly production and Total Cost estimates for a new manufacturing firm wishing to enter the smart phone market. Fill in the blank cells in columns a., b., c., d., and e. on the table by computing the appropriate values.

 Table 1. Smart cell phones produced in an hour Total Cost (TC) Variable Costs (VC) Average Variable Costs (AVC) Average Total Costs (ATC) Average Fixed Cost (AFC) Marginal Cost (MC) a. b. c. d. e. 0 \$3,200 n/a n/a n/a n/a 15 \$3,525 30 \$3,875 45 \$4,250 60 \$4,650 75 \$5,075 90 \$5,525 105 \$6,725 120 \$8,210 135 \$9,950

3. Based on your calculations in completing the table in Question 2, what is this manufacturerâ€™s minimum cost output level? Explain your answer.

4. According to our textbook (page 341) when one additional unit is produced, two factors directly impact the change in average total costs, the Spreading effect and the Diminishing Returns effect. In the following two situations explain how the factors of the Spreading effect and the Diminishing Returns effect cause the average total cost to be different.

a. Production of the 10th Gizmo resulted in an average total cost (ATC) of \$20, but production of the 11th Gizmo resulted in an average total cost of \$22.

b. Production of the 10th Gizmo resulted in an average total cost (ATC) of \$20, but production of the 11th Gizmo resulted in an average total cost of \$18.

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