# Calculate Jack’s total variable cost (TVC), marginal cost (MC), and average variable cost (AVC) at these four levels of output. b. If the average price that Jack charges for each car he services is \$500, how many cars per week should he take in?

Jack’s total variable cost (TVC) is the sum of all direct costs associated with producing a certain level of output. This includes wages, materials, and other expenses that vary directly with output. At each of the four levels described above, Jack’s TVC will be different:

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\$

## Calculate Jack’s total variable cost (TVC), marginal cost (MC), and average variable cost (AVC) at these four levels of output. b. If the average price that Jack charges for each car he services is \$500, how many cars per week should he take in?

Average Variable Cost (AVC), meanwhile, is calculated by dividing total variable costs by the number of units produced. AVCs for each level are as follows:

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..

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Homework Services
• Chemistry Homework Help
• Engineering Assigment Help
• Physics Homework Help
• Science Homework Help
• Computer Science Homework Help
More Services
• Biology Homework Help
• Information Systems Homework Help
• Civil Engineering Homework Help
• Electronics Assignment Help
• Data science Homework Help
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.