Let's explore how rising costs helped to kill off most printed newspapers after the Internet became available in the mid-1990s. Imaginethat you are a newspaper publisher in the year 2004. You are in the middle of a one-year factory rental contract that requires you topay $700,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also havea marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.10 per paper.Instructions: Enter your answers rounded to two decimal places.a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC pernewspaper?AFC per newspaper risesfrom $to $b. What happens to the MC per newspaper?MC per newspaper does not changec. What happens to the minimum amount that you must charge to break even?It risesfrom $to $

a)The AFC increases. For 1 million papers, AFC = (700,000+1,250,000+0.35*1,000,000).1000000 =…

Answered: Let's explore how rising costs helped…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. A production process using two inputs, labor and capital is Q = 5LK where Q is output per day. MPK = 5L and MPL = 5K. The wage (w) = $150 per hour and (r) = $1,000 per hour. Determine the least cost combination of K and L when the desired output is 1,000 What is the minimum cost of producing 1,000 per day?
Month (m): 4 Day (d): 1 Use the two numbers above, m and d, to complete the cost function for a perfectly competitive firm: Cost (q) = m q2 + d = (30) For a cost function like yours, Marginal Cost (MC) = 2 m q . Specifically, what are the following for the cost function you wrote out above? Fixed Cost = Average Total Cost = Cost (q)/q = Variable Cost = Average Fixed Cost = FC/q = Marginal Cost = 2 m q = Average Variable Cost = VC/q = (15) Fill in the table with your values from your cost function. q Total Cost AVC AFC ATC MC 0 0 0 -- -- -- 1 2 3 4 5 6
Consider a firm producing Smirnoff Mule which uses two inputs-machines and labor-to produce output (Q). The amount paid to a unit of machine input is called rent; on the other hand, the amount paid to the unit of labor is called the wage rate. If the wage rate is at P500/unit and the rent for the machine is at P1200/unit, given the following table: TABLE 2 Output 0 10 20 30 40 50 60 70 Machine Inputs 30 30 30 30 30 30 30 30 Labor Inputs 60 110 150 210 310 450 630 6. Compute for the firm's TV C, TFC, TC, AV C,AFC, AC, and MC. (Show your formulas).
In Bushville, residents typically either work as salaried employees or owns small business on Central Square. Salaried employees on average earn $56,000 per year. All of the stores are rented by real estate companies who own the buildings. Currently the typical store brings in $325,000 of revenue per year. The typical variable costs needed to run a store in Bushville (paying for labor, buying material, etc.) are $210,000 year. a) What is the opportunity cost of running a store? Explain how you know this. b) Given this opportunity cost, what rent will the real estate companies charge? Explain. c) Suppose that a new highway brings more visitors to town, and stores on Central Square now brings in $472,000 of revenue per year with modest increase in variable costs to $236,000. What will happen to rents? Who will benefit – shop owners or the real estate companies?
You run a school in Florida. Fixed monthly cost is $5,755.00 for rent and utilities, $5,797.00 is spent in salaries and $1,680.00 in insurance. Also every student adds up to $103.00 per month in stationary, food etc. You charge $672.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,825.00, salaries to $6,682.00 and insurance to $2,164.00 per month. Variable cost per student will increase up to $171.00 per month. However you can charge $1,143.00 per student. At what point will you be indifferent between your current mode of operation and the new option? Submit Answer format: Number: Round to: 0 decimal places.
You run a school in Florida. Fixed monthly cost is $5,909.00 for rent and utilities, $5,531.00 is spent in salaries and $1,775.00 in insurance. Also every student adds up to $98.00 per month in stationary, food etc. You charge $683.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,500.00, salaries to $6,043.00 and insurance to $2,370.00 per month. Variable cost per student will increase up to $158.00 per month. However you can charge $1,162.00 per student. How much do you currently charge per student?
For the equations below, q is the total number of units produced per day by m employees of a manufacturer, and p is the price per unit at which the q units are sold. Find the marginal-revenue product for the given value of m. q= 2 500m - m² 50 -, p = 0.8q +90; m = 70 The marginal-revenue product when m = 70 is. (Type an integer or a decimal.)
A leather coat manufacturer can produce 150 pieces of leather coats in a week at a total cost of $6000, and 250 pieces of leather coats at a total cost of $12,000. Find the manufacturer’s weekly fixed costs and marginal cost per leather coat.
Suppose a firm has the following expenditures per day: $250 for wages and salaries, $50 for materials, $60 for equipment, and $40 for rent. The market wage for the manager is $120 per day but the owner-manager does not draw a salary. Assume the daily revenue is $420. What is the accounting profit for the firm described above? Just give equation formula.
Suppose that the production function for Hannah and Sam's home remodeling business is Q = F(L,K) Q = 10L0.1K0.4.Assume the wage rate is $8,000 per week and the cost of renting a unit of capital is $1,000 per week.a. What is the least-cost input combination for remodeling 400 square feet each week? Instructions: Round your answers to 2 decimal places. units of labor and units of capital. b. What is the total cost? Instructions: Round your answer to 2 decimal places. $ .revised jrl 08-11-2011
Assume that C(x) is in dollars and x is the number of units produced and sold. For the total-cost function C(x)=0.01x² +0.4x + 50, find AC and C'(x) when x = 60 and Ax = 1. AC $ (Simplify your answer. Type an integer or decimal rounded to two decimal places as needed) C'(x) when x= 60 is $ (Type an integer or a decimal) per unit
(a) For the cost function C(w1, w2, y) = 2y²w} w, calculate the Allen elasticity of substitution between the two inputs at the cost-minimizing input point (xf(w1, w2, y), a(w1, w2, y)). (b) Consider the production function f(r, y, z) = Vry + rz+ yz. Find the scale elasticity SE at (x, y, z) = (1,2, 3), (5, 1,6), (6, 6, 6) and determine if the pro- duction function is IRTS, CRTS, or DRTS locally at each point. (c) A profit maximizing firm in the market operates where the production exhibits decreasing return to scale (DRTS). Is this market in its long-run equilibrium? Justify your answer. (d) Suppose that there are the infinite number of potential firms that produce the identical output good y under the cost function C(y) = + 3. Assume free entry and exit. Find the long-run equilibrium output price p, the amount of the output that each firm in the market produces in the long-run equilibrium, and the value of profit that each firm earns in the equilibrium.

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