Ball Bearings, Inc., faces costs of production as follows:QuantityTotal Fixed Costs (Dollars)Total Variable Costs (Dollars)0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production. (b.) The price of a case of ball bearings is $50. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is...(c.) True or False: This was a wise decision.(d.) Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity. At this level of production, the firm's profit is...True or False: This is the best decision the firm can make.

Ball Bearings, Inc.

a) Calculations of Costs of Production:

Qty Total Fixed   Total       Total    Marginal  Average  Average   Average

       Costs ($)  Variable  Costs ($) Costs ($)   Fixed      Variable     Total

                        Costs ($)                                Costs ($)  Costs ($) Costs ($)

 0      100             0            100         100          100              0            100

 1       100           50            150         50           100             50           150

2       100           70            170          20            50             35            85

3       100           90           190          20            33              30            63

4       100          140          240          50            25              35           60

5       100         200         300          60             20             40            60

6       100         360         460         160             17              60             77

b)  For the first ball bearings, the profit in this case is a loss of $100 (Revenue - Total costs; $150 - 50).

c) False

d) At this level of production, the firm's profit, is a loss of $100.  This is the best decision the firm can make: False.

Explanation:

a) Data:

Costs of production as follows:

Quantity   Total Fixed Costs ($) Total  Variable Costs ($)

   0                        100                                   0

   1                         100                                 50

  2                         100                                 70

  3                         100                                 90

  4                         100                                140

  5                         100                              200

  6                         100                              360

a) Ball Bearings, Inc. can become profitable when the total revenue exceeds the total costs (variable and fixed).  Ball's marginal cost is the additional cost that the corporation incurs for producing one additional unit of ball bearings.  Its average fixed, variable, and total costs are computed by dividing the total fixed, variable, and total costs by the number of ball bearings produced.