Your firm is a coffee shop. Your fixed costs are the cost of the shop, $900. Your variable costs...
Question:
Your firm is a coffee shop. Your fixed costs are the cost of the shop, $900. Your variable costs are the costs of labor and the wage paid to each worker is $120 each. Employing 3 workers your average product is 46 cups of coffee. Your average total cost is :
Average Total Cost:
The average total cost level measures the per unit cost level (both variable and fixed) that is being faced by the producer in order to produce a given quantity of output level. The average total cost level is computed as:
{eq}ATC = \frac{TC}{Q} {/eq}
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerIn the above-mentioned case study, the total cost level of employing three workers can be computed as:
Total cost level = fixed cost level + variable...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Average Total Cost | Definition & Formula & Examples
from
Chapter 3 / Lesson 23
5.1K
Learn what is the average total cost. Learn its use, its formula, and how to apply it.
Related to this Question
- You own a coffee shop. Labor is your only variable input. Your fixed costs are the cost of your rent on the shop and the cost of your milk steamer, which add up to $1200. The wage paid to each worker
- Suppose that Kim owns a coffee shop, and the coffee business is perfectly competitive. On a daily basis, her fixed cost from machinery is $30. Her daily variable costs for labor and ingredients are de
- Every coffee shop in Jitterville has a fixed cost of $25 per day, a capacity of 25 cups of coffee per day, and a variable cost of $1.00 per cup of coffee. There are 110 coffee drinkers in Jitterville, each of whom will purchase one cup of coffee per day f
- In the long run, the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. For this range of output, the coffee shop exhibits: a. economies of scale b. constant returns to scale c. d
- If Bryan's cafe has an average total cost (which includes opportunity cost) of $4.10 per coffee and an average variable cost of $3.90 per coffee, should he keep selling coffees in the short run if the price is $4 per coffee? a. Yes b. No c. Need more info
- Consider the perfectly competitive market for coffee. In the short run, a coffee plantation has a cost curve of STC(Q) = Q^2 + 4Q + 8. Assume that the fixed costs are non-sunk. At what price would the plantation choose to shutdown?
- Consider the perfectly competitive market for coffee. In the short run, a coffee plantation has a cost curve of STC(Q) = Q^2 + 4Q + 8. Assume that the fixed costs are non-sunk. What is the short-run supply curve for the coffee plantation? Show your comple
- Local coffee shops all agree to charge $5 for a cup of coffee. What type of unfair business practice is this an example of? a. bid-rigging b. production limitation c. price-fixing d. none of the above
- Consider the perfectly competitive market for coffee. In the short run, a coffee plantation has a cost curve of STC(Q) = Q^2 + 4Q + 8. Assume that the fixed costs are non-sunk. What is the short-run supply curve for the coffee plantation?
- Fill in the table below. Assume fixed costs is equal to $100 and labor is the only variable cost, paid $80 per employee.
- 1. The owner of a small retail store does her own accounting work. How would you measure the opportunity cost of her work? The opportunity cost of the owner's accounting work is A. the explicit cost
- Complete the table below. A worker costs $96 a day and the firm has fixed costs of $200. Round your answers to 1 decimal. What are the total costs for 6 workers? Show your work.
- All costs are borne by sellers and all benefits accrue to buyers. It costs seller A $10 to produce a pound of coffee, which it sells for $18. It costs seller B $12 to produce a pound of coffee, which it sells for $15. Prof. G. is willing to pay the same a
- A company buys lumber, hires workers, and the workers use company power tools to make rocking chairs. Briefly explain, what is meant by the term 'variable cost' and give two examples of variable costs based on the rocking chair example.
- You own a cafe in a large urban area that carries a total of $500,000 per year in fixed costs. Your cafe sells only coffee for $2,50 per cup. The average variable cost per cup is $1. a. How many cups would you need to sell to break even? b. How many cup
- Consider the perfectly competitive market for coffee. In the short run, a coffee plantation has a cost curve of STC(Q) = Q^2 + 4Q + 8. Assume that the fixed costs are non-sunk. At what price would the plantation choose to shutdown? Show your complete solu
- How do I determine the economics of a cup of coffee using fixed and variable cost in both short-run and long-run?
- Floyd's Coffee Shop collects on the average $10 per customer. Its variable cost per customer averages $6, and its annual fixed cost is $60,000. In order to break even, it must serve how many customers
- A company buys lumber, hires workers, and the workers use company power tools to make rocking chairs. Briefly explain what is meant by the term __fixed cost__ and give an example of a fixed cost the rocking chair company probably faces on a regular basis.
- A speciality coffee house sells Colombian coffee at a steady rate of 6000 pounds annually. The beans are purchased from a local supplier for $3.00 per pound. The coffee house estimates that it costs them $75 in paperwork and labor to place an order for th
- Denna has a shop in Imre where she makes lutes. Making 4 lutes costs $1,800. On the other hand, it costs $3,050 to make 9 lutes. 1. What is the variable cost of manufacturing 7 lutes? 2. What is the
- Variable Cost: Devi has a shop in Imre where she makes lutes. making 4 lute costs $1400. On the other hand, it costs $2000 to make 7 lutes. Devi's discount rate is 15%. What is the variable cost of
- A coffee retailer (Bob's) developed the following daily demand curve for coffee for Your Town, NY. Q = 500 - 300(P) + 200(Pc) + 0.01(M) Where P is the price of Bob's coffee, Pc is the price of Starb
- You own a small deli that sells sandwiches, salads, and soup to the community. Which of the following is an indirect, or implicit, cost of the business? a. wages paid to part time employees b. the job
- Suppose that you own a coffee shop, and have estimated demand for coffee as Q = 80 ? 12 P + 0.005 I + 3 P t ? 7 P s Where P is the price of coffee, I is consumer income, P t is
- Which of the following would be an example of a fixed cost to a firm? a. Rent for the building that it occupies b. Wages for the laborers c. Cost of raw materials d. Electricity and other fuel costs
- If Marco's cafe was previously selling 300 coffees per day at a price of $5 per coffee, but is now only selling 230 coffees per day at a price of $4 per coffee. By how much has Marco's economic profit per day declined if his average total costs (which inc
- A firm has fixed costs of $60 and variable costs as indicated in the table below. Complete the table (Round your answers so that you enter no more than 2 decimal places)
- Which of the following is an example of variable costs for a business? a. hourly wages. b. cost of business licenses. c. cost of purchasing a business vehicle. d. rent.
- Is the labor expense for an assistant plumber who is hired on an hourly basis and works with the owner-manager of the plumbing company when the owner needs a helper classified as a variable cost, a fixed cost, or a quasi-fixed cost? Explain.
- Chad runs a coffee shop that has annual revenues of $280,000, supply costs of $70,000, and employee salaries of $65,000. He has the option of renting out the coffee shop for $80,000 per year, and he h
- The selling price for an item is 50% greater than the variable cost per item. Fixed costs are $50,000. What is the break-even sales? Assume the variable and fixed costs remain the same, but the selli
- A popular coffee shop opens until late at night. The customers are noisy and nearby residents find it hard to sleep. The following table reports the coffee shop's marginal cost of staying open later than 10 PM, together with the marginal cost to residents
- Which of the following is an example of fixed costs for a business? a) hourly wages. b) cost of business license. c) fees for customer credit card charges. d) gasoline for company vehicle.
- Assume that coffee shops operate in a perfectly competitive industry. A single coffee shop, Brick and Mortar, decides to charge an entrance fee in addition to charges for its coffee and pastry. Which of the following is most likely to happen? A. Brick an
- For a construction company, would the salary paid to the company's bookkeeper be considered a fixed or variable cost? Explain.
- Suppose that a manufacturing firm in New Jersey, we found that Average variable cost=$10, and Fixed cost=$10,000. If the firm's pricing strategy is to add a 25% m on cost, what price should ark up, wh
- The following short-run information for an individual firm is given. Labor (L) is the only variable input. The price of Labor is $200/week. Fixed costs are $100/week. (A) Complete the rest of the table. (B) At which output level (or labor unit) does
- Suppose that the economy produces two goods: coffee (in cups) and cookies. The price of a cup of coffee is fixed at $2 and the price of a cookie is fixed at $3. a) In 2013, the economy produced 2000 coffees and 3000 cookies. Calculate the economy's nomina
- Computers cost $100 each and you must pay each worker $25 per hour. A. If you assign one worker per computer, what is the cost of inventorying a single item? B. What if you assign two workers per com
- After constructing a new factory, the cost of building the factory is a: a) variable cost. b) past cost. c) significant cost. d) taxable cost. e) sunk cost.
- Which of the following is an example of fixed costs for a business? a. hourly wages. b. cost of a business license. c. fees for customer credit card charges. d. gasoline for company vehicles.
- Which of the following is an example of fixed costs for a business? a. hourly wages. b. cost of business license. c. fees for customer credit card charges. d. gasoline for company vehicles.
- Which of the following are examples of a company's fixed costs? a. wages for hourly workers b. raw materials for production c. monthly rent for factory or retail space
- Suppose a family-owned yogurt shop has $80,000 in total revenues, $36,000 in rent, and $20,000 in additional operating costs. The husband and wife work in the shop and pay no wages to themselves or ot
- Use the following table to answer the following questions: If the workers are paid $10 per hour, the price of the product is $4, and the fixed cost of the business is $10, then how many workers should the business employ? a. six b. five c. seven d. thre
- The cookie company in the mall hires only labor to produce cookies. The workers are paid $80 per day, and the cost of renting the space in the mall is $350 per day. 1) The daily fixed costs of production are: A. $80 B. $430 C. $350 D. $160 E. $0
- In the long run, costs are: a. dependent on the firm b. variable and fixed c. fixed only d. variable only
- Recent research indicates that coffee consumption may be harmful to health. What is the effect of the study on Starbucks in the short run? How do variable and fixed costs change? What happens to Starbucks' competitors?
- Suppose that the economy produces two goods: coffee (in cups) and cookies. The price of a cup of coffee is fixed at $2 and the price of a cookie is fixed at $3. a) In 2013, the economy produced 2000 coffees and 3000 cookies. Calculate the economy's nomin
- For a construction company, would the $50,000 annual salary paid to its construction supervisor be considered a fixed or variable cost? Explain.
- Identify if the following cost is fixed, variable, both, neither: 1) Wages paid to temporary worker 2) Property taxes on factory building 3) Property taxes on administrative building 4) Sales comm
- Firm X owns both tea and coffee plantations. It sells directly to the public. If the firm wants to increase the sales for the coffee, assuming that tea and coffee are substitutes, which of these strategies can it employ? a. Increase the price of tea b. Of
- For a construction company that builds houses, which of the following costs would be a fixed cost? a. The $20 per hour wage paid to a construction foreman, b. The $30,000 per year salary paid to the company's bookkeeper, c. The $2 per worker-hour paid to
- An example of a firm's fixed cost would be the ________. (a) monthly rent it pays based on a multiple-year lease (b) cost of employing labor (c) quantity of inventory it accumulates (d) raw materials used in production (e) cost of shipping the goods it pr
- Nicholas Coffee roasts coffee the old-fashioned way (in gas-fired, rotating barrel roasters). It is selling its gourmet coffee beans at $20 per pound. Variable costs per pound are $8, and it has fixed cost of $840,000 per year. 1. Find its breakeven quant
- Suppose that you close down your coffee shop and sell your coffee maker for $500. If you originally bought the coffee maker for $4,000 and it lost $1,000 because of depreciation (i.e., age and use), the sunk cost of the coffee maker is: A. $3, 500. B. $
- 1.How does price discrimination help customers? 2.Profits are a sign of a business exploiting its customers and workers. Profits are a sign that a firm has served its customers well. Pick one stateme
- Which is part of a firm's short-run variable cost? A) Rent on the shop space it uses. B) Interest payments on borrowed money. C) Payment on the lease for factory machinery. D) Wages paid to factory workers.
- My Questions: 1.) If the shop is part of a perfectly competitive market for burgers on and around the campus where the market price is 2$, what would the shop?s marginal cost be? 2.) In the above mark
- Suppose that a single firm monopolizes the market for coffee imports from Colombia into the United States. Supposed the firm is called Juan Perez. Juan Perez has production costs characterized by cons
- A small company manufactures a certain product. The production department estimates that the variable cost is $50 per unit and fixed cost is $10. The advertising department gives the following price-d
- For a construction company that builds houses, which of the following costs would be a fixed cost? a. The $27,000 per year salary paid to the company's bookkeeper, b. The $23 per hour wage paid to a construction foreman, c. The $2.5 per worker-hour paid t
- Material cost are $25.50, labor is 3.5 hours per unit, wages are $7.50 per hour, fixed costs are $78,500 per year, and the selling price is $61.50 per unit. a. determine the break even point b. what
- Suppose an owner of a building can use the building for her own business or rent it out to other firms. If the owner uses it for her own business, she has explicits costs of $12,000. Her other option is to rent it for $10,000. Her economic costs are _____
- Your cousin Vinnie owns a painting company with fixed costs of $200 and the following schedule for variable costs: |Quantity |Variable Cost |Average Fixed Cost |Average Variable Cost |Average Total C
- Which of the following is an implicit cost for the owner of a small store in a town? A. The wage that is paid to the assistant manager. B. The cost of purchasing canned goods from a wholesale food distributor. C. The value placed on the owner's skills in
- Which of the following is most likely a fixed cost? a) Expenditures for raw material b) Wages for unskilled labor c) Fuel cost d) Property Taxes
- Draw an iso-cost curve for a firm that has $100 to spend on producing jeans. Input includes labor and materials. Labor costs $8 and materials cost $4 a unit. How does each of the following affect the
- Your company makes common coffee mugs and you purchased new equipment to improve labor productivity. For the last few years your production line consisted of six workers earning $10.20 per hour making a 650 cups per hour. The original machines cost $186
- Which of the following are examples of a company's fixed costs: a) wages for hourly workers b) monthly rent for factory or retail space c) raw materials for production
- Determine whether each of the following is an explicit cost or an implicit cost. a. Payments for labor purchased in the labor market. b. A firm's use of a warehouse that it owns and could rent to another firm. c. Rent paid for the use of a warehouse not o
- Suppose that Kim owns a coffee shop, and the coffeSuppose that Kim owns a coffee shop, and the coffee business is perfectly competitive. On a daily basis, her fixed cost from machinery is $30. Her dai
- Analyze the impact of a swing in coffee prices of 10 cents per pound in either direction if you have a 10-contract position, where each contract calls for delivery of 37,500 pounds of coffee.
- If a firm's production function is shown on a graph and the number of workers hired is the only variable input, then A) total cost is measured on the horizontal axis and the number of workers is measured on the vertical axis. B) the number of workers is
- The price of a cup of coffee is $2.00. The price of a cup of tea is $1.20. The relative price of a cup of tea with respect to a cup of coffee is A) 0.6 cups of coffee. B) 1.25 cups of coffee. C) 1.0 cup of coffee. D) 0.75 cups of coffee. E) 1.67 cups
- Firm A has an overhead of $1,000 a year and can produce 1,000 units at the cost of $1 per unit and units beyond that at the cost of $3 per unit. Firm B has no overhead and can produce any number of units at the cost of $2 per unit. Firm A has 3,000 custom
- A firm uses labor and machines to produce output according to the production function f(L,M)=4L^{(1/2)} M^{(1/2)} , where L is the number of units of labor used and M is the number of machines. The cost of labor is $40 per unit and the cost of using a m
- Compare the business-level strategy of Starbucks to that of a different, less expensive coffee-shop (Costa Coffee, Dunkin' Donuts, etc.). What are the fundamental differences with regard to the produc
- A change in which of the following will cause a change in the quantity supplied of coffee? a. the technology or the production process of making coffee b. anticipation of a change in the price of coffee c. the wages of coffee bean pickers d. the price of
- Transaction cost is: (a) the cost of buying and selling goods and services. (b) the cost of negotiating, enforcing, and administering contracts. (c) the cost of negotiating agreements between labor and management. (d) the cost of making transactions.
- A firm's operating costs can be classified as fixed, variable, or mixed. Costs for items such as telephone, electricity, and maintenance are often mixed costs, meaning that they have both a fixed and
- Use the table below to answer questions about a firm?s hiring decision. |Labor (workers)|Output (units)|Total Cost ($) |0|0|$50 |1|1|5$60 |2|27|$70 |3|37|$80 |4|45|$90 |5|50|$100 What is the
- Suppose robots(x1) and staff(x2) are needed to run a shop. Robots cost $21 p year while staff cost $49 per year. Also, robots can serve 7 customers an hour while staff can serve 4 customers per hour.
- Is the cost of the owner's time to run a plumbing company classified as a variable cost, a fixed cost, or a quasi-fixed cost? Explain.
- Acme, Inc. is a specialty coffee restaurant. The following table shows the relationship between the number of workers and Acme's output on any given day. You also know that Acme has total fixed costs of $120 per day, and each worker costs $80 per day. A.
- A firm produces 100,000 units in one year. It has only three yearly expenses: $50,000 in rent, $100,000 in labor, and $100,000 in raw materials. What is the firm's average fixed cost? a) $0.50 b) $1.00 c) $2.00 d) $2.50
- The selling price of the product made in a factory is $199.95. The variable costs per unit are: The fixed costs total $300,000 per year. Perform a breakeven analysis of this company. a. What is the t
- A business produces 4,500 units per month, which it sells at $20/unit. Costs include $10,000 on raw materials, $15,000 in wages for operators, and $15,000 in wages to salespeople. If the business is just breaking even, what are its fixed costs? a. $35,000
- Offshore Petroleum's fixed costs are $2,500,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10. Determine the degree of operating leverage at an output of 400,000 barrel
- Suppose that fixed costs for a firm in the automobile industry (start-up costs of factories, capital equipment, and so on) are $5 billion and that variable costs are equal to $17,000 per finished auto
- Firm "Jily-Nily" makes Toasters. Their production function is given by Y = K 2 L 2 . . They have 10 units of capital and currently employ 2 workers. Wages are $10, and cost of capital is r = 2. Suppo
- An artisan makes 50 necklaces in six hours. She could have earned $10 an hour working for someone else. If each necklace sells for $5 and the explicit costs total $14, economic profit equals: a. $0. b. $64. c. $176. d. $236.
- Hayley buys coffee shop. The coffee shop costs $2 million, has an annual revenue of $1.3 million, and only costs $500,000 per year to operate. What is the net present value and the annual worth of Ha
- A firm makes and sells a computer for $1000. The variable cost to produce a computer, for the range of production of the firm, is $300 per unit. The total fixed costs per year to make the computer are $5.0 million. a. How many computers must be made and s
- Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs? a. costs related to physical inputs b. costs related to labor expen
- You've been hired as an economic consultant by a price-taking firm that produces scarves. The firm already has a factory, so it is operating in the short run. Fill in the blanks in the following table
- In the calculation of the CPI, coffee is given greater weight than tea if: a. consumers buy more coffee than tea. b. the price of coffee is higher than the price of tea. c. it costs more to produce coffee than it costs to produce tea. d. coffee is more re
- A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a c
- An online stock trading firm has a fixed cost of $1020 and a variable cost of $14x, where x is the number of clients that subscribe to the firm's trading service. If the firm has 170 clients, what is the lowest price it can charge each client without push
Explore our homework questions and answers library
Browse
by subject