Use the following information to answer questions 5-8. Kaufmann, Inc. is a textile firm specializing in linen tablecloths

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Scenario #1
Use the following information to answer questions 5-8. Kaufmann, Inc. is a textile firm specializing in linen tablecloths. The following table shows its total cost of production.

 

See attachment...

 

5.) What is Kaufmann's fixed cost?

6.) What is the average total cost (ATC) of producing three tablecloths per hour?

7.) What is the average variable cost of producing five tablecloths each hour?

 

Scenario #2

Use the following information to answer questions 9-10. Suits Me Fine is a clothing manufacturer in Queens, NY. Currently, it manufactures 50 dress shirts per day in a medium-sized factory.

The following diagram shows the firm's short-run and long-run average total cost curves. In particular, the red curve represents Suits Me Fine's average total cost in the long run, and the three green curves show its average total cost curves in the short run for three different sizes of factory: small, medium, and large.

 

See attachment...

 

10.) Now suppose Suits Me Fine shirts become wildly fashionable, so that the company believes they will permanently be selling 80 shirts per day. In this case, in the long run, the firm would minimize its costs by producing shirts in a ______ factory at a long-run average cost of __________.

 

A.) Large; $4.25 per shirt

B.) Large; $5.75 per shirt

C.) Large; $4.00 per shirt

D.) Medium; $4.25 per shirt

E.) Medium; $4.00 per shirt

F.) Medium; $5.75 per shirt

  • 9 years ago
Use the following information to answer questions 5-8. Kaufmann, Inc. is a textile firm specializing in linen tablecloths
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