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 3, Problem 3.5IP
To determine
The hidden cost of choosing a decision.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Habib Bank Limited estimates equation of demand of its product as:
Q = 55 – 0.5P - (where P = price and Q = Quantity of output),
and its total cost of production as
TC = 20 + Q + 0.2Q2 Where TC = total cost and Q = Quantity of output)
Write the equations of the firm’s costs, as a function of Q:
Average Total Cost ATC?
Average Variable Cost AVC?
Average Fixed Cost AFC.?
Marginal Cost MC?
The output level that will maximize total profit and the amount of revenue and profit that Habib Bank would receive at optimal level of production.?
The output level that minimizes average total cost.?
please answer all questions
The variable cost to make a certain product is $71 per unit. Research indicates that the lowest price no one will pay for this product is $156. Calculate optimal price for this product. (Rounding: penny.)
Starbucks is hoping to make use of its excess restaurant capacity in the evenings by experimenting with selling beer and wine. It speculates that the only additional costs are hiring more of the same sort of workers to cover the additional hours and costs of the new line of beverages. What hidden costs might emerge?
Chapter 3 Solutions
Managerial Economics: A Problem Solving Approach
Knowledge Booster
Similar questions
- Another factor that drives up a business' operating expenses is wages. Therefore, if the wage rate becomes high, All statements are correct it will translate to lower profit it will result to higher business income it will expand the venturearrow_forwardBill runs a business that makes custom-printed towels. It will cost him $8 each to purchase and print on towels, and he will have to pay a rent of $1,700 per month for him workshop. Based on market research, Bill estimates that he can sell custom towels for $25 each. a) Calculate the number of towels he needs to sell per month to break-even. towels b) Calculate the break-even in dollars (round off to the nearest cent).arrow_forwardFind price, quantity, and profit. Fixed cost: 300 MR = 64-4q mc= 4q p=64-2q will upvotearrow_forward
- Suppose that the cost of producing q appliances is C(q) = 500 – 4q + q? and the demand function is given by p = 14 – 2 q. The quantity that minimizes the average cost function and the corresponding price are g= 22.36 and p= -30.72 a) Why the corresponding price is negative? explain The maximum profit would be -473 b) Why the maximum profit is minus? explain what happensarrow_forwardWhat are the short-run and long-run costs of the production of Adidas?arrow_forwardShould a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.arrow_forward
- Solve the followingarrow_forwardThe manufacturer of smart printers is trying to decide what price to set for its product. The demand and cost function are assumed to be as follows: P = 80 -2Q TC= 160 +50Q-1.5Q ² What price should it charge if it wants to maximize its revenue in the short run? What is the optimal quantity for the printer under this price? No handwriting. Please. Typearrow_forwardYou are the CEO of Widget World Corporation. Researchers have developed a new electronic widget. The fixed costs to make the widget will be $32,000, and the variable cc will be $145 per widget. The demand function isq =-38p+ 9768. Answer the following questions: 1) Write the expense function (in terms of q) 2) Write the expense function (in terms of p-hint: you will need your demand function) 3) Write the revenue function (in terms of p)arrow_forward
- An ice cream producer has fixed costs of $70,000 per month, and it can produce up to 15,000 ice cream tubs per month. Each tub costs $10 in the market while the producer faces variable costs of $3 per tub. What is the economic breakeven level of production? b. Calculate the ice cream producer’s monthly profits at full capacity. What would happen to the monthly profits if another ice cream producer entered the market, driving the price of ice cream tubs down to $7 per unit?arrow_forwardA shoe store sells 250 pairs of sneakers per month at a per-unit price of $115. This is the price and quantity at which profits are maximized. The owner needs to pay a monthly rent of $5,500 whether the store stays open or not, and the rental contract cannot be canceled in the near future. The total variable cost (TVC) of the shoe store is $25,000 per month. What should the owner of the store do in the short run? O Keep the store open even though negative profits are being made O Continue to produce even in the long run, as the store is making positive profits O Decrease the price and sell more shoes O Close the store O Sell fewer pairs of shoesarrow_forwardPakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC Given above costs can you determine what will be the firm’s production in Stage 1? What is the breakeven price and breakeven quantity for this firm? What is the shutdown price and quantity for this firm? Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above. Given the market price of Pak$ 50 how many units should the firm produce? how many firms are competing in this market in short-run? How many firms will be in the industry in the long-run? How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and…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
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher: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
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning