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Steve produces bells. He spends time to create a custom design for each client. Once the bell is created, she produces the bell using material like steel, metal etc., which he buys at market prices. He manufactures all his bells in a factory that he rents by the hour. The factory produces 50 bells per hour.

Steve produces bells. He spends time to create a custom design for each client. Once the bell is created, she produces the bell using material like steel, metal etc., which he buys at market prices. He manufactures all his bells in a factory that he rents by the hour. The factory produces 50 bells per hour.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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三、 No Spacing v ab x, x A v Normal Styles Pane Steve produces bells. He spends time to create a custom design for each client. Once the bell is created, she produces the bell using material like steel, metal etc., which he buys at market prices. He manufactures all his bells in a factory that he rents by the hour. The factory produces 50 bells per hour. 1. a) Explain how to calculate Steve's Marginal Cost of the 5th bell. Clearly state any assumptions you need to make. Explain your reasoning. 2. b) Instead of the factory, Steve decides to hire an electronic manufacturing for bells. The cost to hire the electronic manufacturer is higher than the factory, but the electronic printer can produce 150 bells per hour. How does this change his Marginal Costs? Explain your reasoning. Clearly state any assumptions you are making. 3. c) He prices his bells in the following way- every client pays a fixed fee. Then they can order as many bells as they want at zero additional cost. A consultant says Steve can increase his profits by raising the per bell fee (making it > 0) and keeping the fixed fee as it is. Do you agree? Explain how (if possible) he can increase his profits. Focus English
Transcribed Image Text:三、 No Spacing v ab x, x A v Normal Styles Pane Steve produces bells. He spends time to create a custom design for each client. Once the bell is created, she produces the bell using material like steel, metal etc., which he buys at market prices. He manufactures all his bells in a factory that he rents by the hour. The factory produces 50 bells per hour. 1. a) Explain how to calculate Steve's Marginal Cost of the 5th bell. Clearly state any assumptions you need to make. Explain your reasoning. 2. b) Instead of the factory, Steve decides to hire an electronic manufacturing for bells. The cost to hire the electronic manufacturer is higher than the factory, but the electronic printer can produce 150 bells per hour. How does this change his Marginal Costs? Explain your reasoning. Clearly state any assumptions you are making. 3. c) He prices his bells in the following way- every client pays a fixed fee. Then they can order as many bells as they want at zero additional cost. A consultant says Steve can increase his profits by raising the per bell fee (making it > 0) and keeping the fixed fee as it is. Do you agree? Explain how (if possible) he can increase his profits. Focus English
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