Managerial Economics (MindTap Course List)
4th Edition
ISBN: 9781305259331
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 5, Problem 8MC
To determine
The correct statement about short run.
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Students have asked these similar questions
Which statement is true? Fixed costs
a.do NOT exist in the long run.
b.depend on the firm's level of output.
c.are zero if the firm is producing nothing.
d.are the difference between total costs and average variable costs.
Your company sells Beyonce concert DVDS. Total fixed
costs for your operation are $10,000 a year. The variable costs
are: 50Q – Q
(Q is in hundreds)
The firm pays $500 a year in various taxes. The market price of
these DVDS is $40. Beyonce has many fans.
Show your work/thought process:
a. Should the firm shut down in the short run? Explain.
b. If the firm's fixed costs decreased from $10,000 to
$8,000, would the firm shut down in the short run?
When you calculate marginal costs, they should include:
SELECT THE CORRECT ANSWER
A.the market price of the product.
B.only variable costs.
C.both the variable and fixed costs.
D.only fixed costs.
Chapter 5 Solutions
Managerial Economics (MindTap Course List)
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Similar questions
- Which of the following represents a long-run decision for the firm? a. rehiring workers who were previously laid off. b. determining what price to charge for a given level of output. c. deciding how much output to supply to the market at the current market price. d. building another wing on the plant in order to add a new assembly line. answer. (d. building another wing on the plant in order to add a new assembly line.) Please help me explain this questions. Thanks in advancearrow_forwardSuppose a firm's marginal cost is increasing as it produces more output. Then the firms is said to be experiencing which of the following? a.increasing returns to scale b.diminishing returns to scale c.losses d.profitarrow_forwardSuppose a firm's marginal cost is increasing as it produces more output. Then the firm is said to be experiencing which of the following? a.increasing returns to scale b.diminishing returns to scale c.losses d.profitarrow_forward
- Designated cost incurred by the short-run firm. Select one: a. fixed cost b. total cost c. variable cost d. average costarrow_forwardIn the short run, a firm's total costs of producing 100 units of output equal $10,000. If it produces one more unit, its total costs will increase to $10,150. a. What is the marginal cost of producing 101 instead of 100 units of output? b. What is the firm's average total cost of producing 100 units? c. What is the firm's average total cost of producing 101 units?arrow_forwardThree college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the stu- dent recreation center, which pay $6,000 per year. A fully equipped facility can be leased at a cost of $8,000 per year. Additional costs are $1,000 a year a. What are fixed costs?b. What are variable costs? c. What is the marginal cost?arrow_forward
- The law of diminishing returns is a long-run concept. a. True b. Falsearrow_forwardThe vertical distance between ATC and AVC as output expands is aa. marginal costb. total fixed costc. average fixed cost d. economic profit per unitPlease, show your answer graphically.arrow_forwardFirms minimize costs; thus, a firm earning short-run economic profits will choose to produce at the minimum point on its average total cost curve. Do you agree or disagree with this statement? A. Disagree: Firms earning profits will produce to the right of the minimum point on the average total cost curve. B. Disagree: A firm minimizing costs will produce where marginal cost equals the average total cost of production. C. Disagree: Firms earning short-run profits will produce where the difference between price and MC is largest. D. Disagree: The minimum point on the average total cost curve is when output equals zero. E. Agree: Since firms seek to minimize costs, they will always produce at the minimum point on the ATC curve.arrow_forward
- Macmillan Learning a. In the accompanying diagram, place the points labeled Minimum AVC and Minimum ATC in their correct places. Marginal cost, average cost ($ per unit) True False Minimum AVC Minimum ATC F MC Quantity b. Average variable cost reaches its minimum point at a lower level of output than average total cost.arrow_forwardi need typing clear urjent no chatgpt i will give 5 upvotes.arrow_forwardMarginal cost tells us a. the amount fixed cost rises when output rises by one unit b. the marginal increment to profitability when price is constant c. the value of all resources used in a production process d. the amount total cost rises when output rises by one unitarrow_forward
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