You are a newspaper publisher. You are in the middle of a one-year factory rental contract that requires you to pay $500,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.35 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 per newspaper? AFC per newspaper rises from $ |to $ b. What happens to the MC per newspaper? MC per newspaper does not change v c. What happens to the minimum amount that you must charge to break even? It rises from $ to $
You are a newspaper publisher. You are in the middle of a one-year factory rental contract that requires you to pay $500,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.35 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 per newspaper? AFC per newspaper rises from $ |to $ b. What happens to the MC per newspaper? MC per newspaper does not change v c. What happens to the minimum amount that you must charge to break even? It rises from $ to $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:You are a newspaper publisher. You are in the middle of a one-year factory rental contract that requires you to pay $500,000 per
month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal
printing cost of $0.35 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 per
newspaper?
AFC per newspaper rises
v from $
to $
b. What happens to the MC per newspaper?
MC per newspaper does not change
c. What happens to the minimum amount that you must charge to break even?
It rises
v from $
to
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