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Hello, in this video i will be answering the following.
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So we're going to start with a.
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So a is to calculate the average cost of the variable, the average variable cost of the fifth unit.
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So we're basically going to do $42 divided by 5.
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That's going to equal $8 .40 or $8 .40.
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The next is what is the firm's profit maximizing quantity of hats? so the maximizing quantity can be determined by using marginal analysis.
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So up until what point does the marginal cost equal marginal? so that means that this is beyond this point.
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Increasing production will result in an increase in total cost that exceeds the increase in order.
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So that means that the maximizing quantity would be 8 hats.
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And then c is if the rent of the building increases what will happen to the firm's profit maximizing? so in the short run the firm is operating on a fixed level of capitalism or a fixed level of capital such as the building occupies.
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So if the rent is increased the firm's average variable will increase...