Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 9MC
To determine
Cost reduction strategy.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A restaurant should not stay open for an additional hour if it's _exceeds_
a) average benefit; average cost
b) average cost; average benefit
c) marginal benefit; marginal cost
d) marginal cost; marginal benefit
I.
A company produces at an output level where marginal cost is equal to marginal revenue
and has the following revenue and cost levels:
Total revenue = $1,450
Total cost = $1,500
Total variable cost = $1,300
What would you suggest?
a. Shut down.
b. Continue to produce because the loss is less than the total fixed cost.
c. Increase production to lower the marginal cost.
e. Raise the price.
II.
At current long-run production levels, the marginal revenue of a competitive firm is $15 and
the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should
a. cut back on production.
b. stop production all together.
c. produce more.
d. continue producing at current levels.
Rob quit his $4,000/month coffee shop position and started an ice-cream business. Rob does not get paid a salary for running the ice-cream business. When calculating the economic profit of the ice-cream business, his old $4,000 coffee shop salary is
Select one:
a. counted as part of the total revenue.
b. counted as part of the implicit costs.
c. counted as part of the explicit costs.
d. ignored.
Chapter 10 Solutions
Managerial Economics: A Problem Solving Approach
Knowledge Booster
Similar questions
- Graph - Which of the following alternatives describes the following graph? Select one: a. Try to have an average capacity that matches the demand with incremental expansion b. Fall behind demand through incremental expansion c. Get ahead of demand with a one-step upgrade d. Stay ahead of demand with incremental scalingarrow_forwardUse the following table for questions 7-10 Carving knives Home users Professional Chefs No-name brand $40 $70 High-end professional series $60 $130 Given that the firm wants to sell both the versions, how should it price its products to have the users self-sort themselves profitably?arrow_forwardA market research study of current and potential customers of drones found that “service after the sale” was their biggest issue with their current BATNO. If you were going to go into the business of building and selling drones, you would. A. Price your drones lower than the competition. B. Design a drone with a longer battery life (and therefore longer flight time) than what is currently available. C. Put a better camera in your drone than that which is currently available. D. All of the above. E. None of the above.arrow_forward
- Price equals $20, quality equals 400 units, unit cost equals $15, implicit cost equals $4000. What does economic profit equal?arrow_forward3-1 Fixed-Cost Fallacy Describe a decision made by your company that involved costs that should have been ignored. Why did your company make the decision? What should it have done? Compute the profit consequences of the change.arrow_forwardWhat occurs when the cost of producing a range of products is lower than the cost of producing each product individuallyarrow_forward
- (a) Calculate the value of marginal profit when marginal revenue is $400 and marginal cost is $700 (b) Is the firm getting benefits?arrow_forwardThe marketing mix does NOT include which of the following?Choose one answer.a. Product b. Promotion c. Delivery of the product d. Social classarrow_forwardMarginal cost equals A) all the opportunity cost of producing the amount of output. B) the opportunity cost of producing one more unit of output. C) the profitability derived from producing another unit of output. D) productive efficiency.arrow_forward
- 1) The most important goal of the firm is to? A) maximize its sales volume. B) maximize its revenues. C) maximize its profits. D) minimize its costs.arrow_forwardCosts should be managed to maximize profits. Comment on this statement.arrow_forwardIf you do not have a large market for your product or service, what should you do to be sure it retains its value? a)Make sure to scale your business and its cost to the size of your market. b)Identify other products or services that you could include alongside the original in order to increase market size. c)Consider ways to substantially change your product or service in order to increase your market size. d)Shelve your idea; perhaps the market will increase in future.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning