Economists estimate price elasticities more precisely using average price and quantity to computer percentage changes. Thus,Using this formula, compute E for a popcorn price increase from 15 cents to 25 cents per ounce (Figure 4.5 on page 85).

Problem 4

Supply Decisions and Costs.

a. Complete the following table.

Rate of Output Total Cost Marginal Cost Average Cost

0 $100

1 $110

2 $130

3 $165

4 $220

5 $300 b. What is the value of fixed cost?

c. On a graph, depict marginal cost and average total cost making sure to label both cost curves on the graph. (Hint #1: You will need to calculate the columns of MC as is done on page 105 and ATC curves on page 103). (Hint #2: The total cost, total total fixed and total variable cost curves are much larger than the MC and ATC curves and do not belong on the same graph).The response addresses the query posted in 247 words with APA References //The following calculation is based upon price elasticity of demand which is derived by formula based on quantity and price of a commodity. In the calculations below, the price elasticity of popcorn has been depicted that calculated on the basis of the current and previous quantity demanded and current and previous price of commodity.//Ans1. The basic formula for elasticity of demand is (Mankiw, …The solution addresses the query posted in 247 words with APA References, calculations and graphs

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