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Q: If, for the last unit of a good produced by a perfectly competitive firm, MR>MC, then in producing…
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- What is die difference between accounting and economic profit?A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method Choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs 400, what is the best production method? What method should the company use if the cost of labor rises to $20/unit?Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
- Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?Would you consider an interest payment on a loan to a film an explicit or implicit cost?Use the figure below to answer the following questions. Average cost (dollars per sweater) 12 H Select one: OA. Plant A OB. Plant B O C. Plant C O D. Plant D O E. none of the above 10 8 6 4 2 0 5 10 ATCA ATCB ATCC ATCD 15 20 25 30 Output (sweaters per day) Figure 11.4.2 Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four different plant sizes. Which plant has the lowest average total cost for an output rate of 5 sweaters a day?
- See Hint Suppose you are the owner of a firm producing jelly beans. Your production costs are shown in the table. Jelly Bean Production Вохes Average cost per box 100 $0.95 101 $0.96 102 $0.97 $0.98 103 Initially, you produce 100 boxes of jelly beans per time period. Thena new customer calls and places an additional order for jelly beans, requiring you to increase your output to 101 boxes. She offers you $1.75 for the additional box. Should you produce it? Choose one: O. A Yes, because $1.75 is greater than average total cost, O B. No, because $1.75 is less than average total cost. O C. Yes, because $1.75 is greater than the marginal cost. O D. No, because $1.75 is less than the marginal cost. 9 E. We can't say because we don't know average variable cost.The manager of the donut shop tells you that hesells donuts for $1 each, and that if he were to makeadditional donuts, based on his current level ofoutput, it would cost him $0.80 per donut. Do yourecommend that the manager increase or decreasethe number of donuts he makes?Please complete the below table. Output TotalFixed Cost TotalVariable TotalCost AverageFixed AverageVariable AverageTotal cost MarginalCost 0 20 1 10 2 6 3 24 4 13.5 5 66 6 14 7 76 8 114