Curt makes specialty pizzas. His total fixed cost is $44 a day, and his average variable cost is $2 a pizza. Few people know about Curt's Pizzas and he is maximizing his profit by selling 22 pizzas a day for $4 a pizza. Curt thinks that if he spends $200 a day on advertising, he can increase his market and sell 35 pizzas a day for $4 a pizza. If Curt does not advertise, his economic profitloss = $ If Curt decides to advertise, he expects his economic profitloss to be $. Is it worthwhile for Curt to advertise (if his expectations are correct)? OA No OB. Yes
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- Maria manages a bakery, that specializes in ciabatta bread, and has the following information on demand and costs: Ciabatta Bread Sold Per Hour (Q) Price (P) Total Cost (TC) 0 $6.00 $1.50 1 5.50 6.00 2 5.00 9.50 3 4.50 12.50 4 4.00 15.00 5 3.50 17.00 6 3.00 18.50 7 2.50 20.50 8 2.00 23.50 a. To maximize profits, Maria should sell nothing loaves of ciabatta bread per hour. (Enter your response as an integer.)Bianca bakes delicious cookies. Her total fixed cost is $40 a day, and her average variable cost is $1 a bag. Few people know about Bianca’s Cookies, and she is maximizing her profit by selling 10 bags a day for $5 a bag. Bianca thinks that if she spends $50 a day on advertising, she can increase her market share and sell 25 bags a day for $5 a bag. Choose the best answer. Advertising will 1.(decrease/ increase/ not change) Bianca's 2.(variable cost/fixed cost) to produce the cookies. If Bianca advertises, in the short run, will she continue to sell her cookies for $5 a bag or will she change her price? 3. (will sell cookies at a lower price/ will sell cookies at a higher price/ will keep the price at $5 per bag)Taylor used to work as a yoga instructor at the local gym earning $27,000 a year. Taylor quit that job and started working as a personal trainer. Taylor makes $60,000 in total annual revenue. Taylor's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $1,500 per year for equipment. Taylor's accounting profit is _______, and Taylor's economic profit is _______.
- Explain why a perfectly competitive firm won’t advertise.What is economic profit? Explain with the help of graph how economic profit for a firm in a perfectly competitive industry tend to vanish in the long run? Can a competitive firm increase economic profit using advertisement as a profit maximization strategy in the long run.Suppose Dmitri runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Dmitri's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Dmitri produces. Dmitri's profit is maximized when he produces frying pans. When he does this, the marginal cost of the last frying pan he produces is , which is than the price Dmitri receives for each frying pan he sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximize his profit) is , which is than the price Dmitri receives for each frying pan he sells. Therefore, Dmitri's profit-maximizing quantity corresponds to the intersection of the curves. Because Dmitri is a price taker, this last condition…
- What does it mean to say that: “A firm operating under perfect competition conditions is a pricetaker"?Why Can't this firm set any price it chooses? What if it operates in a monopolisticallycompetitive market, would it be able to set the price? Why? Give some real life examples tosupport your answer.2. You overheard Mr. John, the newly-hired marketing manager, saying: “I think our company shouldtake advantage of economies of scale by increasing output, thereby spreading out our overheadfixed costs”.Would you agree with this statement? If not, provide a better description for the term“economies of scale”. Explain how they may be achieved by organizations. Highlight what wouldprevent them to occur.3. For many, the principle “marginal revenue equal marginal cost" condition for profit maximizationis rather confusing.Discuss the rationale behind the condition, highlighting how different it is from the break-evenanalysisMaria manages a bakery that specialises in ciabatta bread, and has the following information on demand and costs: Based on the available information, calculate total revenue, marginal cost and marginal revenue. Present all information in a table format (including the number of bread(s) sold per hour, price, total cost, total revenue, marginal cost and marginal revenue. To maximise profit, how many ciabatta breads should Maria sell per hour, what price should she charge, and how much profit will she make? What is the marginal revenue received by selling the profit-maximising quantity of ciabatta bread? What is the marginal cost of producing the profit-maximising quantity of ciabatta bread?You decide to create a burger restaurant named BurgerDeals to help pay for college fees. The table below contains total pricing information for your single product, large extra-cheese burger. Your town's burger market is fiercely competitive, with big extra-cheese burger selling for $7 on average. Fill in the blanks in the table and answer the following question. If you produce at the profit-maximizing level (or loss-minimizing level), what is the amount of economic profit (or loss) per burger will you make?
- Suppose Poornima runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Poornima's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Poornima produces. Calculate Poornima's marginal revenue and marginal cost for the first seven teddy bears she produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. Poornima's profit is maximized when she produces teddy bears. When she does this, the marginal cost of the last teddy bear she produces is , which is than the price Poornima receives for each teddy bear she sells. The marginal cost of producing an additional teddy bear (that…The makers of Panax pain reliever do a lot of advertising and have very loyal customers. In contrast, the makers of generic paracetamol do no advertising, and their customers shop only for the lowest price. Assume that the marginal costs of Panax and generic paracetamol are the same and constant. Draw a diagram showing Panax’s demand, marginal revenue and marginal cost curves. Label Panax’s price and mark-up over marginal cost. Repeat part 1 for a producer of generic paracetamol. How do the diagrams differ? Which company has the bigger mark-up? Explain. What factors would affect the extent to which the makers of Panax could engage in predetory or destroyer pricing to force out competitors in this market?Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. For each level of output, calculate total revenue, marginal revenue, average cost, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Your response must include, for each level of output .the total revenue, marginal revenue, average cost, and marginal cost. Then draw your conclusion about the level of output and total the firm will earn in profits? Table of prices = $25,$24,$23,$22.50,$22,$21.60,$21.20 Quantity= 0,10,20,30,40,50,60 TC= $130,$275,$435,$610,$800,$1,005,$1,225 Ty.