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The WipeOut Ski Company manufactures skis for beginners. Fixed costs are $10. Sales revenue is
$20 per unit. Fill in the table as much as is useful. Calculate profits and answer the following
questions 1-7
Total
Average
Average
Variable
Fixed
Total
variable
total
marginal
Quantity
cost
cost
cost
cost
cost
cost
0
10
1
10
2
28
3
45
4
70
1. What is the total cost for an output of 4 units?
a) 0
b)
14
c)
60
d)
80
e) none of the above
2. What is the Average variable cost for an output of 2 units?
a) 0
b) 14
c)
60
d)
80
e) none of the above
3. What is the profit for an output of 1 units?
a) -10
b) -5
C) 0
d) 5
e) 10
4. What is WipeOut’s profit maximizing output in the short run?
a) 0
b) 1
C) 2
d) 3
e) 4
A new competitor entered the market using a better production method that allows them to undercut
the current market price. The price falls to $15 per unit.
5. What is WipeOut’s profit maximizing output in the short run?
a) 0
b) 1
c) 2
d) 3
e) 4
6. What is Wipe Out’s profit maximizing output in the long run?
a) 0
b) 1
c) 2
d) 3
e) 4
7. Due to this competition, Ceteris Paribus, consumer surplus
a) increases b) decreases c) stays the same d) cannot be determined e) it’s not quot;equot;!Microeconomics