Exercises 47-50 describe a number of business ventures. For eachexercise,a. Write the cost function, C.b. Write the revenue function, R.c. Determine the break-even point. Describe what this means.47. A company that manufactures small canoes has a fixed costof $18,000. It costs $20 to produce each canoe. The sellingprice is $80 per canoe. (In solving this exercise, let x representthe number of canoes produced and sold.)48. A company that manufactures bicycles has a fixed cost of$100,000. It costs $100 to produce each bicycle. The sellingprice is $300 per bike. (In solving this exercise, let x representthe number of bicycles produced and sold.)49. You invest in a new play. The cost includes an overhead of$30,000, plus production costs of $2500 per performance.A sold-out performance brings in $3125. (In solving thisexercise, letxrepresent the number of sold-out performances.)50. You invested $30,000 and started a business writinggreeting cards. Supplies cost 2¢ per card and you are sellingeach card for 50¢. (In solving this exercise, let x representthe number of cards produced and sold.)

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(6) Which of the following statements best describes firm's cost-minimizing behaviors? a) A firm's cost is minimized when the isocost line and the isoquant are tangent. b) A firm's cost is minimized when the marginal rate of technical substitution is greater than he slope of the iso cost line. c) A firm's cost is minimized when the slope of the tangent of the isoquant is less than the slope of the isocost line.
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Consider an airline's decision about whether to cancel a particular flight that hasn't sold out. The following table provides data on the total cost of operating a 100-seat plane for various numbers of passengers. Total Cost Number of Passengers (Dollars per flight) 40,000 10 60,000 20 65,000 30 68,000 40 70,000 50 71,000 60 72,500 70 73,500 80 74,000 90 74,300 100 74,500 Given the information presented in the previous table, the fixed cost to operate this flight is s At each ticket price, a different number of consumers will be willing to purchase tickets for this flight. Assume that the price of a flight is fixed for the duration of ticket sales. Use the previous table as well as the following demand schedule to complete the questions that follow. Price Quantity Demanded (Dollars per ticket) (Tickets per flight) 1,000 700 30 400 90 200 100
If the Marginal Cost for a product is found to be MC= 8x+60 , and the Marginal Revenue is given as MR= 1200 and the cost of 8 units is found to be $1600, what are: the Total Costs? the Fixed Costs? the Total Profit? the production level, x, that yields Maximum Profit? the corresponding Maximum Profit?
Douglas Fur is a small manufacturer of fake-fur boots in New York City. The following table shows the company’s total cost of production at various production quantities.
To produce the next popular toy, a company has to pay a factory $250, 000 to set up the production line. They also have to pay $25 per item for the raw materials and labor. Write function for the average cost to produce x items. Then describe what happens to the average cost as the factory produces a large number of toys.
G.189.
Businesses wanted to reduce their cost to the minimum without compromising the product quality and violating laws. The total fixed cost decreases if the output increases. Thus the business is left with the variable cost to manage. Notably, the concept of the economies of scale also works for the government, non-profit organizations and individuals. The entity becomes more efficient as it produces more output and reduces cost as a result. The organization can benefit from the economics of scale, consequently, the consumers enjoy lower prices, and the economy expands to increase more demand. For huge businesses, economies of scale provide a competitive advantage over small enterprises. There are two types of economies of scale. The cost that the management can control is internal, while the cause for the cost to decrease attributed to geographic location, government policies, and industry changes are externals. Typically the internal economy of scale is found in large businesses as a…
The marginal cost of producing the xth box of light bulbs is 4 + x2 dollars per box. Determine how much is added to the total cost by a change in production from x = 20 to x = 80 boxes. 1,000
Suppose a firm is currently maximizing profit by producing 100 units of output per day. It is then discovered that the firm owes $1,000 for a one-time tax violation that occurred a few years ago. The firm now needs to pay the $1,000 to the government no matter what. How should the firm react to this additional cost? The firm should increase output in order to increase revenue enough to cover the additional cost. The firm should continue to produce 100 units of output per day, as the $1,000 is a sunk cost and therefore has no effect on production decisions. The firm should shut down in the short run and start back up in the long run. The firm should decrease output in order to decrease variable costs by $1,000.
For its current level of production, a firm is attempting to minimize its costs. The firm has determined that the marginal product of labor is 10, the marginal product of capital is 20 and the cost per unit of labor is $5, whereas the cost per unit of capital is $10. To minimize cost for the given output the firm should Increase the amount of capital and decrease the amount of labor Leave the amount of capital and labor as they are Decrease the amount of capital and increase the amount of labor
You are planning to setup a new food truck, where you will be selling two types of sandwiches (1.Veg, 2.Chicken), each sold for $10. You've decided to staff the food truck with two employees who will be paid $15/hr each. The truck is open for 10 hours and both employees work the full shift. If the cost of the ingredients is $5 for each sandwich, how many Veg and Chicken sandwiches do they need to sell to avoid having a loss at the end of the month?

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