Determine whether each of the following is true or false: 1. In the short run, insurance on your property is a fixed cost.
2. In the short run, the heating of your warehouse is a fixed cost.
3. In the long run, there are more fixed costs than in the short run.
Assume that you run a concession stand at a small movie theater selling popcorn. Each day you must pay the theater management $50, so this is your fixed cost. If you are able to sell 100 boxes of popcorn each day, the variable cost per box is $0.15. Use these figures to determine average fixed cost, average variable cost, and average total cost.
Based on the following table, where do diminishing marginal returns begin to set in? Explain.
Machines Daily Output
1 300
2 700
3 1,000
4 1,200
5 1,300
6 1,300