V (5) suppose that you decide that it would not be a bad idea to get an internship over the summer to gain some experience. A local furniture company, "Chairs or Us", calls you and the manager wants to test you on how much economics you know. He asks you the following questions: a) What happens to the firm's profit maximizing output choice and profit if the price of a chair falls from $ 40 to $ 35? b) Again, from the data given, show what happens to the firm's output choice and profit if the total fixed costs of production increased from $ 50 to $ 100? What general conclusion can you reach about the effects of fixed costs on the firm's output choice? Q (units) 0 1 2 3 4 5 6 7 8 9 10 11 Price ($/unit) TR 40 40 40 40 40 40 40 40 40 40 40 40 TC 50 100 128 148 162 180 200 222 260 305 360 425 II MR MC c) Using the same information, draw the firm's supply curve (Hint: you may want to plot the appropriate cost curves); Use a graph paper if necessary. Legend : TR = Total Revenue, II = Profits, MR = Marginal Revenue, MC = Marginal Cost

V (5) suppose that you decide that it would not be a bad idea to get an internship over the summer to gain some experience. A local furniture company, "Chairs or Us", calls you and the manager wants to test you on how much economics you know. He asks you the following questions: a) What happens to the firm's profit maximizing output choice and profit if the price of a chair falls from $ 40 to $ 35? b) Again, from the data given, show what happens to the firm's output choice and profit if the total fixed costs of production increased from $ 50 to $ 100? What general conclusion can you reach about the effects of fixed costs on the firm's output choice? Q (units) 0 1 2 3 4 5 6 7 8 9 10 11 Price ($/unit) TR 40 40 40 40 40 40 40 40 40 40 40 40 TC 50 100 128 148 162 180 200 222 260 305 360 425 II MR MC c) Using the same information, draw the firm's supply curve (Hint: you may want to plot the appropriate cost curves); Use a graph paper if necessary. Legend : TR = Total Revenue, II = Profits, MR = Marginal Revenue, MC = Marginal Cost

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

See similar textbooks

Similar questions

Question 2 You are the manager of medium-sized company that produces a particular kind of alcoholic beverage (BB Bitters) in Ghana. You purchased most ingredients such as ethanol on a competitive market. One morning, you picked up a copy of the Graphic Business, published by the Graphic Communications Group limited, and read an article indicating that the price of ethanol is expected to rise, forcing manufacturers to produce at a high unit cost. In addition, the article indicated that your competitors are expected to reduce the price per unit of Alomo Bitters. Based on this information, what can you expect to happen to the equilibrium price and equilibrium quantity of your product? Explain your answer with an appropriate diagram.
I need help with part b
Only typed answer
The curves show the marginal cost (MC), average variable cost (AVC), marginal revenue (MR), and average total cost (ATC) curves for a firm that sells mid-range cars in a competitive market. Use the area tool to draw the area representing the firm's profit or loss, if the firm produces 6,000 cars. Your answer should be a rectangle drawn with four corners.
FITnest is one of the few fitness centers serving the greater area. The gym has been open for 3 years. It charges a flat price of $25 per visit to its clients, and the firm’s current average cost of production is $10 per visit. (You may assume that average cost has the “traditional U-shape”.) a) The owners of the gym heard you are studying economics, and they want some advice on how they could possibly increase their profits through price discrimination, which is a concept they have heard of but do not know much about. Provide an explanation of what price discrimination is and give them an example of how they could use group pricing in their climbing gym business. Explain how group pricing works to increase their profit. b) Given the current situation in the market for fitness in the area, would you expect to see competitors enter or exit the market? Explain. c) Given the current market conditions, what would you predict to observe in the long run with respect to the demand for…
Suppose the imaginary company of Athena is a small, Raleigh-based American apparel manufacturer specializing in athleisure. The following table presents the brand's total cost of production at several different quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost (Pairs) (Dollars) (Dollars) COSTS (Dollars per pair) 200 175 150 125 On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $160, so you should start your ATC curve by placing a green point at (1, 160). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $100, so you…
The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. a) At the optimal output, what price will Do Drop In charge and what will be its output? Price: $ Output: units b) At the optimal price and output, what will be its total revenue, total cost, and total loss? TR: $ ; TC: $ Total loss: $ c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? AVC must be less than $ .
1. SOCIAL ENTREPRENEURSHIP: Your student organization wants to raise some money to donate to a favorite charity, so you decide to put on a spring benefit show. Even though you are technically "not for profit" for tax purposes, you still want to raise as much money as you can for the cause, so you act like a profit-maximizing firm. Consider how you should act under various scenarios. Assume that the demand for tickets to your show is given by P[Q] = 40 – ½ Q and that your only costs are the 300 you must pay to rent the theatre. Compute your profit-maximizing price (P*), quantity (Q*) and Profit (n*). а.
give everything in ms excel steps for the following (Profit Model) The demand for airline travel is quite sensitive to price. Typically, there is an inverse relationship between demand and price; when price decreases, demand increases and vice versa. One major airline has found that when the price (P) for a round trip between Chicago and Los Angeles is $500, the demand (D) is 700 passengers per day. When the price is reduced to $300, demand is 1,000 passengers per day. a. Plot these points on a coordinate system and develop a function that relates demand to price. b. Develop a mathematical model that will determine the total revenue as a function of price. c. Provide a recommendation to the airline company about the price that should be selected for the round trip between Chicago and Los Angeles such that their revenue is maximized. Describe how you have reached to this recommendation? (your solution may not be the best solution but should be a good solution).
V1
Help solving the table
provide an economic explanation for the provided text below While on vacation, you go to a miniature golf course on a weekday and notice no other customers there while you golf. Why do you think a miniature golf course would stay open during the week when it seems like the revenue from so few customers could not possibly cover the costs of running the golf course? What is an example of another business that stays open even when it's slow, and their revenue does not seem like it could cover their costs? make sure to use concepts from either of the following topics (minimum of two from the list provided rest may be from own knowledge): externalities, public goods and common resources, understanding costs, business behaviour and businesses in competitive markets.