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- You've just been hired to run a division of a toy manufacturing company. Your boss informs you that the doll line in your division will be discontinued and replaced by a new and improved set of dolls later this year. He also tells you that he wants you to raise prices on the current doll line by 20% in order to protect profitability during the transition. You go to a number of sources including field sales reps, market research, and other division heads to ask them how responsive customers have been to changes in prices in the past. They tell you that a 10% increase in price always leads to a 5% decrease in sales volume at the firm. What is your recommendation to your boss and what is your reasoning?A competitive firm has the following short run cost function TC= q3 + 2q2 - 20q + 700. What is the value of the firm's average fixed cost (AFC)of producing 10 units of output? What is the value of the firm's average variable cost (AVC)of producing 10 units of output? What is the value of the firm's average total cost (ATC)of producing 10 units of output? What is the value of the firm's marginal cost (MC)of producing 10 units of output?Georgina is the owner and manager of a small café with monthly sales of 50,000 HK dollars and a monthly expenses of 42,500 HK dollars. Thus, having an accounting profit of 7,500 HK dollars. She could make 10,000 HK dollars a month somewhere else. She does, however, favor running the café. In fact, she would prefer to run the café than do anything else and would even pay up to 2,750 HK dollars per month. Is the café generating a profit, and should she continue running her business? Explain.