Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 9, Problem 1.2P
To determine
The decision regarding the shutdown of the firm.
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Students have asked these similar questions
The following table presents the expected cost and revenue data for the Tucker Tomato Farm. The Tuckers produce tomatoes in a
greenhouse and sell them wholesale in a price taker market.
Complete the table by calculating the firm's marginal cost, average variable cost, average total cost, and profit schedules. Round your
answers to the nearest whole dollar figure. For example, round $316.66 to $317, or $321.42 to $321.
Output
(tons)
0
1
2
3
4
5
6
7
00
8
9
10
Total
Cost
($ Per
Ton)
$500
$600
$650
$750
$900
$1,100
$1,350
$1,750
$2,300
$3,000
$3,900
Marginal Cost
$
$
$
$
$
$
$
Average
Variable Cost
$
|$
Average Total
Cost
$
$
$
$
$
$
$
$
Profit at $250
per ton
-$500
$
$
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$
$
Profit at $200
per ton
-$500
$
$
$
$
$
$
$
Profit at $150
per ton
-$500
$
$
$
$
$
$
$
$
The World of Videos operates a retail store that rents movie videos. For each of the last 10 years, World of Videos has consistently earned profits exceeding $30,000 per year. The store is located on prime real estate in a college town. World of Videos pays $2,400 per month in rent for its building, but it uses only 50 percent of the square footage rented for video rental purposes. The other portion of rented space is essentially vacant. Noticing that World of Videos only occupies a portion of the building, a real estate agent told the owner of World ofVideos that she could add $1,500 per month to her firm’s profits by renting out the unused portion of the store. While the prospect of adding an additional $1,500 to World of Videos’s bottom line was enticing, the owner was also contemplating using the additional space to rent video games. What is the opportunity cost of using the unused portion of the building for video game rentals? Please show me the formula, if there are any. Thank…
The firm Tyrex, Inc. is facing losses, and needs to decide whether to shut down or keep producing. Determine which of the
following scenarios should lead to the decisions to keep producing.
Othe price or marginal revenue is lower than the minimum average variable cost of production
Othe market price or marginal revnue is greater than the minimum average variable cost
Othe market price is greater than the total fixed cost
Chapter 9 Solutions
Principles of Economics (12th Edition)
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- Desmond works as an accountant making $80,000 per year. He is considering leaving his job to open an artisanal cheese shop. He estimates that he will need to spend $20,000 per year on space, $10,000 per year on supplies and $40,000 per year on staff. The shop will earn will earn $120,000 per year in revenue. Assuming his estimates are accurate, what will Desmond's accounting profit be? Assuming his estimates are accurate, what will Desmond's economic profit be? Please enter your solution without commas, dollar signs, or cents.arrow_forwardGiven the following information, should the firm shut down or continue to operate in the short- run: Q=150; P=$7; TFC=$750; TVC=$900 shut down we don't have enough information to answer this question stay openarrow_forwardYou are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, and your cost function is C(Q) = 2Q + 3Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 70 percent chance the market price will be $200 and a 30 percent chance it will be $600. a. Calculate the expected market price. b. What output should you produce in order to maximize expected profits? c. What are your expected profits?arrow_forward
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