A shoe factory produces 20 units of output. its average fixed cost (afc) = $25, average total cost (atc) = $35, and marginal cos
1 answer:
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Answer:
$10
Explanation:
Data provided in the question
Number of units produced = 20 units
Average fixed cost = $25
Average total cost = $35
Marginal cost = $15
As we know that
Average total cost = Average fixed cost + average variable cost
$35 = $25 + average variable cost
So, the average variable cost is
= $35 - $25
= $10
The average total cost is the sum of average fixed cost and the average variable cost
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Answer:
The graph has been attached.
Explanation:
a. Please see attached graph with the shaded budget set labelled A
b. Please see attached. Curve C; D and E are the indifference curves. The most suitable one would be D since it is on the budget curve. E is not maximum utility and C is unattainable given his budget of $20.
c. U (X,Y) = X + 2Y
At C, Utility = 10 + 2(10) = $30. That is above his budget
At D, Utility = 10 + 2(5) = $20. This is within his budget. – most utility.
At E, Utility = 5 + 2(5) = $15. This is below his budget.
The Indifference curve that gives most utility is D, where cheese is 10 and cocoa is 5 units.
