4. Given the information that follows: Sales - 750,000, explicit costs 450,000, return you could have earned by investing your money elsewhere = 50,000, wages that you and your family members could have earned doing the same work for another firm = 70,000. The Accounting cost is equal to 30000 – WRONG ANS

4. Given the information that follows: Sales - 750,000, explicit costs 450,000, return you could have earned by investing your money elsewhere = 50,000, wages that you and your family members could have earned doing the same work for another firm = 70,000. The Accounting cost is equal to 30000 – WRONG ANS

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 7.5IP

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Return to Figure 7.7. What is the marginal gain in output from increasing the number of batters from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns? Figure 7.7 How output Affects Total costs
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Answer the following questions on the basis of this information for a single fifirm: total cost of capital = $1000; price paid for labor = $12 per labor unit; price paid for raw materials = $4 per raw-material unit. a. Suppose the firm can produce 5000 units of output by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5000 units of output?b. Now assume the firm improves its production process so that it can produce 6000 units of output by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average cost of producing the 6000 units of output?c. Refer to your answers to 8a and 8b and explain how process innovation can improve economic efficiency.
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2. A student foregoes her annual summer job (paying in total $3,200) in order to operate a sandwich shop. Rent and other fixed costs are $1,500 for the entire season. Variable cost per sandwich is $0.50. a) What is the opportunity cost for the student? Explain. b) Derive the expressions for the total accounting cost and total economic cost. c) Suppose that the sandwich shop generates a positive total accounting profit of $2,000. Accounting for total economic costs, should the student operate the shop? Explain.
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1)Suppose that labor is the only variable input to the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor? Draw diagrams as required. 2)Assume that the marginal cost of production is increasing. Can you determine whether the average variable cost is increasing or decreasing? Explain. Draw diagrams as required. Note. Don't use chat gpt.
10. Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether itproduces any output.a. How does this tax affect the firm’s fixed, marginal, and average costs?b. Now suppose the firm is charged a tax that is proportional to the number of items itproduces. Again, how does this tax affect the firm’s fixed, marginal, and average costs?
1. A firm is said to be earning normal profit whenever:A. Accounting profit is zero.B. Economic profit is positive.C. Accounting profit is positive.D. Total revenue equals explicit and implicit costs.2. If a 10% increase in inputs results in a 20% increase in output, then the firm is said to exhibit:A. Diseconomies of scaleB. Diminishing marginal returns to scaleC. Constant returns to scaleD. Economies of scale3. Economists have traditionally attempted to avoid the trap of:A. Thinking in terms of total utility.B. Computing marginal utilityC. Making interpersonal utility comparisons.D. None of the above.4. According to the water-diamond paradoxA. Water has a lower MU than Diamond.B. Water has a higher TU than Diamond.C. Prices reflect MU and not TUD. All of the above.
6. Refer to Narrative 16-1. When Peter maximizes his profits, what is his total cost per day?
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