Question: Ball Bearings, Inc. faces costs of production as follows:

Quantity Total Fixed Costs Total Variable Costs

0 $100 $0

1 100 50

2 100 70

3 100 90

4 100 140

5 100 200

6 100 360

1. Calculate the company’s average fixed costs, average variable costs, average total costs, and marginal costs at each level of production
2. The price of a case of ball bearings is $50. Seeing that he can’t make a profit, the chief executive officer decided to shut down operations. What is the firms’ profit/loss? Was this a wise decision? Explain.
3. The CFO tells the CEO it is better to produce 1 case of ball bearings, because marginal cost revenue equals marginal cost at that quantity. What is the firm’s profit/loss at that level of production? Was this the best decision? Explain

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document