AP Microeconomics 3.2: Short-Run Production Costs

Calculate short-run cost measures from tables and explain how fixed inputs, productivity, input prices, and marginal returns shape cost curves.

[Maximum number: 2]

The table provided shows the short-run production function for Lowen Feline, a profit-maximizing firm that produces cat food.

Table for Question 3.2 Short-Run Production Costs question 1 — AP Microeconomics

Lowen Feline sells as many bags of cat food as it wants at a market price of $ 10 per bag and hires as many workers as it wants at a market wage of $ 18.

(a)

Lowen Feline's fixed cost is $ 90. Calculate the average fixed cost if Lowen Feline hires 6 workers. Show your work.

[ 1 ]

Calculate the average fixed cost of $3 and show the work.

Average Fixed Cost $=\frac{\text { Total Fixed Cost }}{\text { Quantity of Output }}$

Average Fixed Cost $=\frac{\$ 90}{30}=\$ 3$

1 point

(b)

Assume labor is the only variable input to Lowen Feline. Calculate the marginal cost if Lowen Feline increases output from 27 to 30 units. Show your work.

[ 1 ]

Calculate the marginal cost as $6 and show the work.

Marginal Cost $=\frac{\text { Change in Total Variable Cost }}{\text { Change in Output }}$

Marginal Cost $=\frac{(\$ 108-\$ 90)}{(30-27)}=\frac{\$ 18}{3}=\$ 6$

OR

Marginal Cost $=\frac{\text { Change in Total Cost }}{\text { Change in Output }}$

Marginal Cost $=\frac{(\$ 198-\$ 180)}{(30-27)}=\frac{\$ 18}{3}=\$ 6$

1 point

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3.2 Short-Run Production Costs question 1

Question (a)

Question (b)