As an Employee of the Grelb Corporation (A Manufacturer of Gas

question 5

Essay

As an employee of the Grelb Corporation (a manufacturer of gas powered generators) you have been asked to determine the nature of their long-run cost structure. Some cost data has been collected for you and appears in the table below. $$\begin{array} { | c | c | c | c | c | } \hline \text { Quantity of generators } & \text { Total costs of labor } & \text { Total costs of tools } & \text { Total Costs } & \text { Average Total Costs } \\\hline 11 & \$ 192 & \$ 127 & & \\\hline 12 & 200 & 136 & & \\\hline 13 & 206 & 145 & & \\\hline 14 & 210 & 150 & & \\\hline 15 & 220 & 155 & & \\\hline 16 & 240 & 160 & & \\\hline 17 & 255 & 170 & & \\\hline 18 & 280 & 188 & & \\\hline 19 & 320 & 212 & & \\\hline 20 & 365 & 235 & & \\\hline\end{array}$$ (a) Fill in the missing values in the table.
(b) Determine the range of output levels over which there exists economies and diseconomies of scale.
(c) Graph the firm's average total cost curve and
(d) Describe how your answer to part (b) above relates to the shape of this curve.

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Definitions:

Break Even

A financial analysis point where total revenue exactly covers total costs, with neither profit nor loss.

Break-Even

The stage at which accumulated costs equal accumulated earnings, leaving no room for profit or loss.

Monthly Dollar Sales

The total value of all sales in monetary terms for a specific month.

Variable Expenses

Costs that change in proportion to the activity of a business, such as sales volume, production levels, or inventory.