Coors Brewing Expanding Plant Coors Brewing Co. of Golden will expand its Virginia packaging plant at a cost of $24 million. The addition will accommodate a new production line, which will bottle beer faster. Coors Brewing employs 470 people at its Virginia plant. The expanded packaging line will add another eight jobs. How will Coors' expansion change its marginal cost curve and short-run supply curve? What does this expansion imply about the point on Coors' LRAC curve at which the firm was before the expansion? Coors' expansion of a plant shifts the firm's marginal cost curve and the short-run supply curve OA leftward; leftward OB. rightward; leftward OC. leftward; rightward OD. rightward; rightward

Coors Brewing Expanding Plant Coors Brewing Co. of Golden will expand its Virginia packaging plant at a cost of $24 million. The addition will accommodate a new production line, which will bottle beer faster. Coors Brewing employs 470 people at its Virginia plant. The expanded packaging line will add another eight jobs. How will Coors' expansion change its marginal cost curve and short-run supply curve? What does this expansion imply about the point on Coors' LRAC curve at which the firm was before the expansion? Coors' expansion of a plant shifts the firm's marginal cost curve and the short-run supply curve OA leftward; leftward OB. rightward; leftward OC. leftward; rightward OD. rightward; rightward

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

Chapter22: Getting Divisions To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 22.1IP

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The following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 d) Is the price $8 a short-run or long-run equilibrium price for the industry? If the price is not a long run equilibrium price, what adjustments are likely to happen in the market for it to reach long run equilibrium. e) What price must prevail in the market for a typical firm to operate in the short run? At this price, how many ice tea will be supplied by all firms in the market?
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Suppose a firm operating in a perfectly competitive industry has costs in the short run given by: SRTC = 8 + 1/2Q^2 and therefore MC = q. (a) Derive expressions for fixed costs (FC), those that do not vary with output, variable costs (VC), those that do vary with output, average variable cost (AVC), and average total cost (ATC). (b) At what quantity is AVC at its minimum (at what AVC level)? At what quantity is ATC at its minimum (at what ATC level)? Calculate ATC at q = 2 and q = 8 and sketch MC, AVC and ATC betweenq=0andq=8.
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Explain: “The short-run rule for operating or shutting down is P > AVC, operate; P < AVC shut down. The long-run rule for continuing in business or exiting the industry is P >= ATC, continue; P < ATC, exit.”