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April 25, 2015

Homework Help: mircoeconomic

Posted by gabrielle on Tuesday, November 18, 2008 at 11:23am.

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 is com-prised of the wages paid to the cooks and the food ingredients. The variable cost associated with each level of output is given
in the accompanying table.
a. Calculate the total cost, the average variable cost, the aver-age total cost, and the marginal cost for each quantity of output.
b. What is the break-even price? What is the shut-down price?
c. Suppose that the price at which Kate can sell catered meals is $21 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down?
d. Suppose that the price at which Kate can sell catered meals is $17 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down?
e. Suppose that the price at which Kate can sell catered meals is $13 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down?

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