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For this assignment, you will be creating cost curves for ABC furniture. Use the
For this assignment, you will be creating cost curves for ABC furniture. Use the attached excel spreadsheet to complete the assignment. Use formulas to fill in each column.
Econ 101 Asst. 3 – ABC Furniture.xlsxDownload Econ 101 Asst. 3 – ABC Furniture.xlsx
ABC Furniture is trying to figure out how to minimize its cost when producing couches each month. To figure out where their unit costs are the lowest, they give you the following information:
Each couch takes $200-worth of wages for workers to produce. The factory owner knows that during regular hours they can produce 20 couches each month. After 20 couches, they need to keep the laborers into overtime. In overtime, they must pay the workers time and a half (1.5x their regular wage). The owner also knows that after 25 couches, the workers need to stay into double overtime (2x regular wage). The factory’s rent is $4,000 a month. Assume there are no other costs.
1.) Fill in all missing columns of data.
2.) Once you have done this, create a graph on your spreadsheet which shows the factory’s marginal cost curve and its average total cost curve.
3.) If the firm wants to minimize its average total cost per couch, how many couches should they produce? You can highlight the row or write in in a cell next to the answer.
(Hint, skip the first box for MC)
(Hint 2 – the marginal cost curve will look a little different than it does in the lecture)
Grading Rubric:
60 pts – Filled in sheet 1 columns with correct data
10 pts – Created accurate graph
10 pts – Correctly identified the quantity with the lowest ATC
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