Kate’s Katering provides catered meals, and the catered meals industry is perfectly competitive. Kate’s machinery costs $100 per day and is the only fixed input. Her variable cost consists of the wages paid to the cooks and the food ingredients. The variable cost per day associated with each level of output is given in the accompanying table.
Quantity of Meals | VC |
---|---|
0 | $0 |
10 | 200 |
20 | 300 |
30 | 480 |
40 | 700 |
50 | 1,000 |
Calculate the total cost, the average variable cost, the average total cost, and the marginal cost for each quantity of output. (Include two decimals in your answers.)
Quantity of Meals | VC | TC of meal | MC of meal | AVC of meal | ATC of meal |
---|---|---|---|---|---|
0 | $0 | $ | - | - | - |
10 | 200 | $ | $ | $ | |
20 | 300 | ||||
30 | 480 | ||||
40 | 700 | ||||
50 | 1,000 |
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Quantity of Meals | VC | TC of meal | MC of meal | AVC of meal | ATC of meal |
---|---|---|---|---|---|
0 | $0 | 100.00 | -- | -- | -- |
10 | 200 | 300.00 | $20.00 | $20.00 | $30.00 |
20 | 300 | 400.00 | 10.00 | 15.00 | 20.00 |
30 | 480 | 580.00 | 18.00 | 16.00 | 19.33 |
40 | 700 | 800.00 | 22.00 | 17.50 | 20.00 |
50 | 1,000 | 1,100.00 | 30.00 | 20.00 | 22.00 |
Using the table from your answer in the last part; what is the break-even price? What is the shut-down price? (Round your answer to two decimal places.)
Break-even price: $
Shut-down price: $
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Quantity of Meals | VC | TC of meal | MC of meal | AVC of meal | ATC of meal |
---|---|---|---|---|---|
0 | $0 | $100.00 | -- | -- | -- |
10 | 200 | 300.00 | $20.00 | $20.00 | $30.00 |
20 | 300 | 400.00 | 10.00 | 15.00 | 20.00 |
30 | 480 | 580.00 | 18.00 | 16.00 | 19.33 |
40 | 700 | 800.00 | 22.00 | 17.50 | 20.00 |
50 | 1,000 | 1,100.00 | 30.00 | 20.00 | 22.00 |
Suppose that the price at which Kate can sell catered meals is $21 per meal. Which of the following statements is true?
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Quantity of Meals | VC | TC of meal | MC of meal | AVC of meal | ATC of meal |
---|---|---|---|---|---|
0 | $0 | $100.00 | -- | -- | -- |
10 | 200 | 300.00 | $20.00 | $20.00 | $30.00 |
20 | 300 | 400.00 | 10.00 | 15.00 | 20.00 |
30 | 480 | 580.00 | 18.00 | 16.00 | 19.33 |
40 | 700 | 800.00 | 22.00 | 17.50 | 20.00 |
50 | 1,000 | 1,100.00 | 30.00 | 20.00 | 22.00 |
Suppose that the price at which Kate can sell catered meals is $18 per meal. In the short run, Kate should produce meals. Kate should (shut down or produce) in the short-run and (shut down or produce) in the long run
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Quantity of Meals | VC | TC of meal | MC of meal | AVC of meal | ATC of meal |
---|---|---|---|---|---|
0 | $0 | $100.00 | -- | -- | -- |
10 | 200 | 300.00 | $20.00 | $20.00 | $30.00 |
20 | 300 | 400.00 | 10.00 | 15.00 | 20.00 |
30 | 480 | 580.00 | 18.00 | 16.00 | 19.33 |
40 | 700 | 800.00 | 22.00 | 17.50 | 20.00 |
50 | 1,000 | 1,100.00 | 30.00 | 20.00 | 22.00 |
Suppose that the price at which Kate can sell catered meals is $13 per meal. In the short run, Kate should produce meals. Kate should (shut down or produce) in the short-run and (shut down or produce) in the long run
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