Problem: The IT and finance departments of a firm report the values in the following table. The firm produces 20 units of output.
Average Total Cost=30 Average Variable Cost=20 Marginal Cost=27 Price=23 Marginal Revenue=18
Q1. What is total fixed cost?
Q2. What happens to profit if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell
Q3. What happens to average total cost if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell
Q4. What happens to average variable cost if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell
Q5. What happens to marginal cost if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell
Q6. What happens to profit if the firm shuts down in the short run and reduces output to zero?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell