You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $700,000 per month, and you have contractual labour obligations of $1,000,000 per month that you can't get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.1 per paper. a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the average fixed cost per paper and to the marginal cost per paper? Instructions: Round your answers to two decimal places. Average fixed cost per paper (Click to select) from $1 per paper to $ per paper
You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $700,000 per month, and you have contractual labour obligations of $1,000,000 per month that you can't get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.1 per paper. a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the average fixed cost per paper and to the marginal cost per paper? Instructions: Round your answers to two decimal places. Average fixed cost per paper (Click to select) from $1 per paper to $ per paper
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 rental contract
for your factory that requires you to pay $700,000 per month, and you have
contractual labour obligations of $1,000,000 per month that you can't get out of.
You also have a marginal printing cost of $0.25 per paper as well as a marginal
delivery cost of $0.1 per paper.
a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers
per month, what happens to the average fixed cost per paper and to the marginal
cost per paper?
Instructions: Round your answers to two decimal places.
Average fixed cost per paper (Ciek to select) from $1
per paper to $
per paper.
Marginal cost per paper (Click to select)
b. What happens to the minimum amount that you must charge to break even on
these costs?
Instructions: Round your answers to two decimal places.
The amount (Click to select)
from $
per paper to $
per paper.
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