Short-Run Cost Minimization

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Overview:

The Excel-based assignments examine the use of data in business decision making. In this assignment short-run cost minimization is examined given variable costs that change with quantity produced and fixed costs that cannot be changed in the short-run.

Action Items:

  1. Download the Short Run Costs Excel worksheet provided by your professor.
  2. Your instructor will provide values for the following cost:
  • Fixed Equipment
  • Materials per Worker
  • Each Worker (up to 5)
  • Each Worker (after 5)
  1. Fill in the fixed cost, variable cost, and total costs for the seven labor/output scenarios.
  2. Calculate average fixed cost, average variable cost, average total costs, and marginal costs and determine the cost minimization output for the firm.
  3. Examine the chart that will appear on the Excel spreadsheet after you input the data.
  4.       Write a 1-page business brief describing the relationship among the costs. Include a copy of the graph showing cost minimization output.

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