Interactive Tools for Production and Costs
https://tlc.trident.edu/d2l/img/lp/pixel.gifDiscussion
For this discussion, we will be looking at several
interactive tutorials or quizzes that might help you and your classmates with
any concepts or calculations that you are having difficulty with.
If you are having difficulty with the numerical calculations
covered in this module, try this interactive tutorial:
http://www.sambaker.com/econ/cost/cost.html
If you are having difficulty with some of the conceptual
issues covered in this module, try the following interactive tutorial:
http://www.pearsoncustom.com/mct-comprehensive/asset.php?isbn=1269879944&id=12353
Note that you don’t need to look at both tutorials, just
pick one or the other and share with your classmates whether you found it
useful or not.
Then search the web and try to find at least one other
tutorial on production costs (marginal costs, variable costs, total costs,
etc.) that you find useful for this module. This could be a tutorial, a video
lesson, an online practice quiz, etc.
Share the link with your classmates and explain what you found useful
about it. As a follow-up to your first
post, try using one of the tutorials that your classmates found and share your
thoughts.
Module 2 – Case
PRODUCTION AND COSTS
Assignment Overview
Before beginning this assignment, make sure you have gone
carefully through all of the required readings for this module. It is very important to carefully absorb both
the general concepts as well as the numerical examples in the background
readings. For this assignment, you will
have to answer some purely conceptual questions as well as some numerical
problems. For conceptual questions, make
sure to thoroughly explain your answers and to cite specific readings from the
required background materials to explain your answers. For numerical problems, make sure to show all
of your work and explain how you arrived at your answers (partial credit can be
given if you get the final answer wrong but do some of the steps correctly).
Note that you need to use Microsoft Excel to do the graphs for the numerical
problems.
Case Assignment
Part A: Conceptual questions
1. Suppose you own a
television factory and at your current level of output you have average total
cost of $800 per television, average variable costs of $700 per television, and
a marginal cost of $400. If the price
your buyers are willing to pay is $500, should you decrease or increase
production? Explain your reasoning, and
make sure to cite at least one of the required readings in your answer.
2. You are the owner
of a restaurant, and currently you have only one waiter. While this keeps costs down, many of your
customers go home because they are tired of waiting in line or waiting for
their order. You hire four more waiters
and waitresses, and you are now able to serve a dramatically higher number of
customers. Seeing the huge productivity
gains from hiring more staff, you then hire 20 more waiters and
waitresses. However, you are not able to
serve any more customers than you were able to when your staff size was only
four. In fact, your restaurant has
become overly crowded because there is not enough room in your restaurant for
all of your staff. You are confused as
to why hiring four more staff members increased your productivity, but hiring
20 more did not. What concept from the
background readings best describes what happened in this case? Explain your reasoning.
Part B: Quantitative problems
The following table gives the total weekly output of
bicycles at Al’s Bicycle Town.
Table 1
Labor Total
Product (TP) Average Product of labor
(AP) Marginal Product of labor (MP)
0 0 na na
1 100 100
100
2 300 —–
___
3 450 ___
___
4 ___ ___
110
5 630 ___ ___
6 ___ 110
___
· Complete this
table.
· Draw the
graphs of the marginal product (MP) and the average product (AP).
· To learn how
to plot the data in Excel, see
https://www.youtube.com/watch?v=B3U9tDcoNeI
· Where do the
AP and MP curve cross?
The cost of 1 worker is $2000 per month. Total fixed cost is
$4000 per month.
· Complete
Table 2 using your answers from Table 1 and by computing total variable cost
(TVC) and total cost(TC).
Table 2
Labor Total
Product (TP) Total variable cost
(TVC) Total cost (TC)
0 0 na 4000
1 100 2000
___
2 300 —–
___
3 450 ___
___
4 ___ ___
12000
5 630 ___
___
6 ___ 12000
___
· Draw the
graphs of the TC and TVC curves. What is the relationship between these two
curves?
· Complete
Table 3 by using your answers from the previous Tables and calculating the AVC,
ATC, and MC.
Table 3
Total Product (TP)
Average variable cost (AVC) Average total cost (ATC) Marginal cost (MC)
0 na na na
100 20 ___ 20
300 —– ___ ___
450 ___ ___ ___
___ ___ 21.43 ___
630 ___ ___ ___
___ ___ ___ 66.67
· Draw the
graphs of the ATC, AVC, and MC curves. What is the relationship between the ATC
and AVC curves? Between the MC and AVC curves?
Assignment Expectations
· Answer the
assignment questions directly.
· Stay focused
on the precise assignment questions. Do not go off on tangents or devote a lot
of space to summarizing general background materials.
· For
computational problems, make sure to show your work and explain your steps.
· For short
answer/short essay questions make sure to reference your sources of information
with both a bibliography and in-text citations. See the Student Guide to Writing
a High-Quality Academic Paper, including pages 11-14 on in-text citations.
Another resource is the “Writing Style Guide,” which is found under “My
Resources” in the TLC Portal.
Module 2 – SLP
PRODUCTION AND COSTS
For Module 1, you did research on consumer demand and
pricing for your business idea. Continue
with the same business idea that you wrote about for Module 1, but now look at
the cost side of your business.
Do some research on various potential start-up expenses for
your business based on research on wages, office space rental rates, etc., in
your home town. More specifically, write
a three-page paper answering the following questions:
1. What do you think
the main expenses will be for your business?
Make sure to discuss labor, rent, equipment, and any other major expense
you can think of.
2. Do some research
on the internet or from your own personal contacts to get a ballpark estimate
of how much the specific expenses are in your home town for the items that you
listed in your answer to Question 1 above.
You can use Craig’s List or similar webpages to get an idea about wages
for different positions that you may need to hire for, and there are many
webpages that have advertisements for renting commercial property in different
parts of the country.
3. Finally, break
down your expenses into fixed plus variable costs. Make sure to cite two of the required
background readings as justification for your classifications of your different
expenses into the fixed and variable cost categories.
SLP Assignment Expectations
Answer the assignment questions directly.
· Stay focused
on the precise assignment questions. Do not go off on tangents or devote a lot
of space to summarizing general background materials.
· Make sure to
use reliable and credible sources as your references. Articles published in
established newspapers or business journals/magazines are preferred. If you
find articles on the Internet, make sure they are from a credible source.
· Reference your sources of information with
both a bibliography and in-text citations. See the Student Guide to Writing a
High-Quality Academic Paper, including pages 11- 14 on in-text citations.
Another resource is the “Writing Style Guide,” which is found under “My
Resources” in the TLC Portal.
