Case Study: Knowing the types of production costs associated with your business (Pediatric Dental Office) in the short-run is important. But knowing how the costs of a Pediatric Dental office behaves on margin and average at different short-run production levels and the impact on Pediatric Dental Office profitability is just as important.
Calculate short-run costs on margin and average at increasing output levels; graph and explain the behavior of said costs on margin and average; and explain how profits behave over said increasing output levels in the short-run.
Pediatric Dental Office is the business.
Question 1. Set the market price ideal will sell Pediatric Dental services in the market.
Question 2. At increasing output levels, do the necessary calculations to complete the following production-cost table that is attached to this post For increasing output levels in the short-run you will calculate the marginal product of labor (MPL), Total Cost (TC), Marginal Cost (MC), Average Fixed Cost (AFC), Average Variable Cost (AVC), Average Total Cost (ATC), and Profit.
Question 3. At which output level does diminishing returns set in at? What happens to the marginal product of labor at the point diminishing returns sets in at?
Question 4. At what output level is the average variable costs and average total costs declining, minimized, and rising? Does the behavior of the marginal cost of production provide indications when average variable and average total costs will decline and then rise? What is the inverse correlation you see between the behavior of the marginal product of labor and marginal cost.
Question 5. As output increases what happens to the average fixed costs and at what output level does the average fixed costs decline at a declining rate?
Question 6. How do the profits behave? Are they increasing but at a declining rate as output increases and diminishing returns sets in at faster rate?
Question 7. Share a graph of your marginal costs, average fixed costs, average variable costs, and average total costs.