All Terrain Thinking

A Compendium of things I think are Important

Economics: It's not just whats' in your wallet

Questions of the Day

Production and Cost

1. A local retailer is experiencing theft problems at its new super store and has decided to hire security guards. The firm wants to minimize the total cost of thefts. The following table shows how the number of security guards affects the number of jewelry pieces per week.  Please use these data to calculate the average and marginal productivity of the guards. [Hint: the product of the jewelry guards is the product 'saved' (not stolen)]

Number of Security Guards	Number of Pieces Stolen per Week
0	50
1	30
2	20
3	14
4	8
5	6

2. Just for a minute assume that you are running Terrible T's, a local T-shirt shop. Make a list of the costs of running the business and identify what you would consider to be the fixed and variable costs.

3. Let's return to our local retailer who is experiencing theft problems at its new super store and who has decided to hire security guards. The firm wants to calculate the costs of saving the jewelry from shoplifting to be able to answer questions such as: how much does it cost me to 'save' 20 items from being stolen?   The following table shows how the number of security guards affects the number of jewelry pieces per week. 

a. You are to construct a table with the cost variables ( Total, Variable and Fixed Costs and Average), the average cost variables (Average total cost, Average variable cost, and Average fixed cost), and Marginal Cost.  It will cost you $200 for a camera which will be needed and $200 per guard.

Guards	Stolen	Saved	Average Product	Marginal Product	FC	VC	TC	AFC	AVC	ATC	MC
0	50	0
1	30	20	20	20
2	20	30	15	10
3	14	36	12	6
4	8	42	10.5	6
5	6	44	8.8	2

b. Construct a graph of the total relationships (total cost, variable cost, fixed cost) and a graph of the average and marginal relationships (average cost, average variable cost, average fixed cost, marginal cost).

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