Company A and Company B are both facing the market price of Php 500. Company A is producing 300 units, with a variable cost per unit of Php 400. Company B, on the other hand, is producing 400 units, with a variable cost per unit of Php 250 due to more technologically efficient processes. Both companies have fixed costs worth P50,000. a. Should Company A operate in the short run? Ceteris paribus, wh

Company A and Company B are both facing the market price of Php 500. Company A is producing 300 units, with a variable cost per unit of Php 400. Company B, on the other hand, is producing 400 units, with a variable cost per unit of Php 250 due to more technologically efficient processes. Both companies have fixed costs worth P50,000. a. Should Company A operate in the short run? Ceteris paribus, wh

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

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 4MC

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An ice cream producer has fixed costs of Php 3,500,000 per month, and it can produce up to 15,000 ice cream tubs per month. Each tub costs Php 500 in the market while the producer faces variable costs of Php 150 per tub. a. What is the economic breakeven level of production? b. Calculate the ice cream producer’s monthly profits at full capacity. c. What would happen to the monthly profits if another ice cream producer entered the market, driving the price of ice cream tubs down to Php 350 per unit?
ECONOMICS UPVOTE WILL BE GIVEN. PLEASE WRITE THE SOLUTIONS LEGIBLY. NO LONG EXPLANATION NEEDED. An ice cream producer has fixed costs of Php 3,500,000 per month, and it can produce up to 15,000 ice cream tubs per month. Each tub costs Php 500 in the market while the producer faces variable costs of Php 150 per tub. a. What is the economic breakeven level of production? b. Calculate the ice cream producer’s monthly profits at full capacity. c. What would happen to the monthly profits if another ice cream producer entered the market, driving the price of ice cream tubs down to Php 350 per unit?
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No written by hand solution Suppose market demand and market supply are given by the equations: QD = 40 - P QS = P - 4 Refer to the above scenario. Suppose a reduction in input prices shifts the market supply curve to QS = P. By how much does total producer surplus increase as a result of this supply shift?
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TRUE OR FALSE.. If the company cannot sell its fixed assets for the meantime, it is better for the firm to continue the operations even if it is losing provided the total revenue can cover the total variable cost and partial of the fixed cost.