At 15 cars per week:
TVC = 500 (3 mechanics x $500/week) = $1500
At 20 cars per week:
TVC = 500 (4 mechanics x $500/week) = $2000
At 22 cars per week:
TVC = 500 (5 mechanics x $500/week) = $2500
At 23 cars per week: TVC= 500(6 mechanics x$500/week)=$3000
Marginal cost (MC), on the other hand, represents the incremental change in total variable cost from one unit to another. For example, at 15 cars MC would be equal to the difference between TVC at 16 and 15 units ($1000). The corresponding marginal costs for each level are as follows:
At 15 Cars Per Week : MC=$0
At 20 Cars Per Week : MC= 1500-1000=500$
At 22 Cars Per Week : MC= 2000-1500=500$
At 23 Cars Per Week : MC= 2500-2000=500$
At 15 Cars Per Week : AVC=$100
At 20 Cars Per Week : AVC=$ 100
At 22 Cars Per Week : AVC=$114 At 23 Cars Per Week : AVC=$130 Given this information, it appears that Jack should take in approximately 20 cars per week if he wants to maximize his profits. Although there is some increase in revenue associated with increasing output beyond this point ($5000 vs. $4000), it comes at a considerable extra expense ($2000). Thus, going beyond 20 cars would likely not result in an overall net gain after accounting for increased labor costs. Therefore it appears that taking on additional customers beyond this point would not be beneficial in terms of maximizing profits; Jack should only take jobs when they can be completed within his current labor force capacity and no further expansion is necessary or will yield greater financial return..
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