Module 7

1-Briefly explain the difference between fixed cost and variable cost. Provide an example of each.

2-Briefly discuss marginal costs, including an explanation of how they are calculated; any condition that is typical to them, and what makes knowing them useful.

3-I'MaGadgetCo. produces and sells widgets. Last year, it produced 18,000 widgets and sold each one for $8. To produce the 18,000 widgets, the company incurred variable costs of $27,000 and a total cost of $36,000. Calculate I'MaGadgetCo's average fixed cost to produce 18,000 widgets.

4-Explain economies of scale. What factors might contribute to economies of scale?

5-Draw a graph that includes average total cost, average fixed cost, average variable cost, and marginal cost.