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?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 41P: A computer company produces affordable, easy-to-use home computer systems and has fixed costs of...
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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
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zero,
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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-
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higher?
8.14
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ational Park Our
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7bd598c5-9faf-4e91-9346-47a3b965fed5%2Fc38c5bf5-ae07-4555-b36f-8387e2ceef7e%2Fvijd18_processed.jpeg&w=3840&q=75)
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
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