Homework Help is Here – Start Your Trial Now!
Business
Economics
8.13 The entire city was essentially shut down for the past two days be- use of an ice storm. (Texans aren't used to driving on icy roads; the oads aren't well de-iced; and the hills make driving especially haz- ardous.) A local restaurateur, whose business was open yesterday, said, "With the low cost of being here, anything we make is fine." Now that cannot be entirely true. If he sells one Coke in 8 hours, surely the revenue will be less than the variable cost of operating the business. (If nothing else, the opportunity cost of his time for a day is probably more than the revenue from one Coke.) But his point is important: He has to pay the rent and most utilities anyway (the fixed cost), so all he needs to do is cover variable cost. Q: How would his decision be affected if his fixed costs were evem higher?

8.13 The entire city was essentially shut down for the past two days be- use of an ice storm. (Texans aren't used to driving on icy roads; the oads aren't well de-iced; and the hills make driving especially haz- ardous.) A local restaurateur, whose business was open yesterday, said, "With the low cost of being here, anything we make is fine." Now that cannot be entirely true. If he sells one Coke in 8 hours, surely the revenue will be less than the variable cost of operating the business. (If nothing else, the opportunity cost of his time for a day is probably more than the revenue from one Coke.) But his point is important: He has to pay the rent and most utilities anyway (the fixed cost), so all he needs to do is cover variable cost. Q: How would his decision be affected if his fixed costs were evem higher?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

Please answer both of these questions. Thanks so much!

dea ance. Since the marginal cost of providing the seat is essentially Q: Movie theaters have a similar cost structure, where marginal I wonder why those last-minute deals aren't better. Perhaps similar deal, day of the perform- and theremaking this uneconomical for the theaters a a zero, d whether oles class. ner seat is very low. Why don't they provide last-minute seats requires luction). am typ- e class. d fifth ze my at a discount? 8.13 The entire city was essentially shut down for the past two days be- use of an ice storm. (Texans aren't used to driving on icy roads; the oads aren't well de-iced; and the hills make driving especially haz- ardous.) A local restaurateur, whose business was open yesterday, said, "With the low cost of being here, anything we make is fine." Now that cannot be entirely true. If he sells one Coke in 8 hours. surely the revenue will be less than the variable cost of operating the business. (If nothing else, the opportunity cost of his time for a day is probably more than the revenue from one Coke.) But his point is important: He has to pay the rent and most utilities anyway (the fixed cost), so all he needs to do is cover variable cost. Q: How would his decision be affected if his fixed costs were even Co me e cost ave, ties ар- ev- st higher? 8.14 AN ational Park Our We are driving up to see the crater of Haleakala on Maui, Hawaii,
Transcribed Image Text:dea ance. Since the marginal cost of providing the seat is essentially Q: Movie theaters have a similar cost structure, where marginal I wonder why those last-minute deals aren't better. Perhaps similar deal, day of the perform- and theremaking this uneconomical for the theaters a a zero, d whether oles class. ner seat is very low. Why don't they provide last-minute seats requires luction). am typ- e class. d fifth ze my at a discount? 8.13 The entire city was essentially shut down for the past two days be- use of an ice storm. (Texans aren't used to driving on icy roads; the oads aren't well de-iced; and the hills make driving especially haz- ardous.) A local restaurateur, whose business was open yesterday, said, "With the low cost of being here, anything we make is fine." Now that cannot be entirely true. If he sells one Coke in 8 hours. surely the revenue will be less than the variable cost of operating the business. (If nothing else, the opportunity cost of his time for a day is probably more than the revenue from one Coke.) But his point is important: He has to pay the rent and most utilities anyway (the fixed cost), so all he needs to do is cover variable cost. Q: How would his decision be affected if his fixed costs were even Co me e cost ave, ties ар- ev- st higher? 8.14 AN ational Park Our We are driving up to see the crater of Haleakala on Maui, Hawaii,
do any- I finally watched the Johnny Depp version of Charlie and the Choco- cost? Taking the market price as given, show the old and new er week spent ors the larger firms; if there Q: Draw a marginal cost curve for a Turkish rug-dealer before the as the pro- of students in ing way? The onI are some economies of scale in this industry anyway, this just moves the bottom of the average total cost curve still farther to rator, explaining why Charlie's father is out of work, says t subsidy is instituted. How would the subsidy change the marginal s grade in the er week in class. Thìs ightray a marginal cost curve for a Turkish rug-dealer before the spent ost? Taking the market price as given, show the old and ga grade in e) and time quantities produced. 1lly watched the Johnny Depp version of Charlie and the Choco- te Factory yesterday with several grandsons. At one point the nar- cator, explaining why Charlie's father is out of work, says that with ll the sales of chocolate bars there are more cavities, more tooth- paste sold, and with the profits the toothpaste makers (Charlie's fa- ther's employer) have put in a lot of machinery. Presumably the company is making more toothpaste; but there is no necessary rea- son to use more capital and less labor. Substitution would occur if labor became relatively more expensive; but that hasn't happened. It must be the case (in the movie) that the technology for produc- ing toothpaste is such that it is much, much cheaper to produce large amounts of toothpaste with fewer workers, and much more capital, than are used to produce small amounts. f each hour al, the pro- 7.17 as the pro- en: Among e than the ades with bit more. product ld have A heart- res did et by a Q: Draw a curve for the marginal product of capital in the toothpaste industry. your
Transcribed Image Text:do any- I finally watched the Johnny Depp version of Charlie and the Choco- cost? Taking the market price as given, show the old and new er week spent ors the larger firms; if there Q: Draw a marginal cost curve for a Turkish rug-dealer before the as the pro- of students in ing way? The onI are some economies of scale in this industry anyway, this just moves the bottom of the average total cost curve still farther to rator, explaining why Charlie's father is out of work, says t subsidy is instituted. How would the subsidy change the marginal s grade in the er week in class. Thìs ightray a marginal cost curve for a Turkish rug-dealer before the spent ost? Taking the market price as given, show the old and ga grade in e) and time quantities produced. 1lly watched the Johnny Depp version of Charlie and the Choco- te Factory yesterday with several grandsons. At one point the nar- cator, explaining why Charlie's father is out of work, says that with ll the sales of chocolate bars there are more cavities, more tooth- paste sold, and with the profits the toothpaste makers (Charlie's fa- ther's employer) have put in a lot of machinery. Presumably the company is making more toothpaste; but there is no necessary rea- son to use more capital and less labor. Substitution would occur if labor became relatively more expensive; but that hasn't happened. It must be the case (in the movie) that the technology for produc- ing toothpaste is such that it is much, much cheaper to produce large amounts of toothpaste with fewer workers, and much more capital, than are used to produce small amounts. f each hour al, the pro- 7.17 as the pro- en: Among e than the ades with bit more. product ld have A heart- res did et by a Q: Draw a curve for the marginal product of capital in the toothpaste industry. your
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Fundraising
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS