6. Explain the following quotations; 1. " Greater production is not tantamount to greater profit" 2. "Higher selling price does not equate to higher profit"
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6. Explain the following quotations;
1. " Greater production is not tantamount to greater profit"
2. "Higher selling price does not equate to higher profit"
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Solved in 2 steps
- 1. Provide your constructive thoughts on the following:" Greater production is not tantamount to greater profit""Higher selling price does not equate to higher profit"4 . Individual Problems 8-1 The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $22, $12, $8, $4, and $2 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $8, $12, $22, $30, and $38 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $2 $4 $8 $12 $22 $30 $38 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.2. The relationship between price and demand per month for a consumer product is p = 3500 -1.1D5 where p is the price per unit in dollars and D is the demand in units. The fixed cost is $300 per month and the variable cost is $4.00 per unit. What is the optimal number of units that should be produced and sold per month? a. b. What is the maximum profit per month?
- 2. Freihofer's bread is a normal good produced by the Freihofer Bakery. Using clearly labeled Demand and Supply curves, show what will happen to the equilibrium price and quantity of Freihofer's bread in each of the following situations? (a) Due to an expansion, households that buy Freihofer's bread experience an increase in income. (b) (c) (d) (e) (f) The cost of wheat used in Freihofer's bread increases significantly. Freihofer Bakery buys improved ovens that reduce the costs of Freihofer's bread. Lovely Loaf, a rival, increases the price of its bread. Consumers become health conscious and switch to low-calorie breads. Situations (a) and (b) occur at the same time.4. Profit maximization in the cost-curve diagram Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. (?) 100 90 80 Profit or Loss 70 60 50 40 ATC 30 20 MC AVC 10 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of watches per day) In the short run, at a market price of $45 per watch, this firm will choose to produce watches per day. On the preceding graph, use the blue rectangle (circle symbals) to shade the area representing the firm's profit or loss if the market price is $45 and PRICE (Dollars per watch)5. Draw a supply and demand curve for local fast food. A new Chick-fil-A, Chipotle, and McDonald's open up, what happens to the supply and demand of fast food? Why? P D Q
- 3. Draw a supply and demand curve for your P favorite product. You get a massive raise at work, what happens to the supply or demand for that product? Why?20. An increase or decrease in the price of wheat results in a shift of its demand curve.(a) True(b) False17. Here are the expenses for your silk-screened T-shirt business: $5 for each plain T-shirt and $3 per T-shirt for ink, other supplies, and the cost of silk screening. You sell the T-shirts for $10 each. Calculate the economics of one unit of sale. What is the percentage of profit based on price?
- (1.) Johnny Rockabilly has just finished recording his latest CD. His record company marketing department determines that the demand for the CD is as follows: Number of CDs Price $24 10,000 22 20,000 20 30,000 18 40,000 6 50,000 3 60,000 The company can produce the CD with no fixed cost and a variable cost of $12 per CD. a. Find total revenues and marginal revenues for each of the quantities. b. What quantity of CDs would maximize profit? What would the price be?1. Suppose a firm sells a luxury and a budget version of a good. Why might that firm make the budget version of the good extremely low quality?11. When a firm considers changing its prices, it needs to consider business resources to change prices and the risks of confusing consumers A. Sunk costs B. Menu costs C. Opportunity costs C. Marginal costs or the costs of using