In the perfectly competitive car production industry, General Motors produces 40,000 sedan cars for an average total cost of $38,000, marginal cost of $33,000, and average variable cost of $30,000. General Motors, in the short run, should produce more cars if the current price is above and should shut down if the current price is below Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. d $33,000; $30,000 с $38,000; $30,000 f $33,000; $28,000 $38,000; $33,000 $30,000; $28,000 $30,000; $30,000

In the perfectly competitive car production industry, General Motors produces 40,000 sedan cars for an average total cost of $38,000, marginal cost of $33,000, and average variable cost of $30,000. General Motors, in the short run, should produce more cars if the current price is above and should shut down if the current price is below Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. d $33,000; $30,000 с $38,000; $30,000 f $33,000; $28,000 $38,000; $33,000 $30,000; $28,000 $30,000; $30,000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter9: Applications Of Cost Theory

Section: Chapter Questions

Problem 2.1CE

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You are the manager of World Wide Athlete, a chain of six sporting goods shops in your area. The shops sell 15 racing bikes per week at a retail price of $689.99. Recently, you put the bikes on sale at $599.99. At the sale price, 18 bikes were sold during the one week sale.
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You are the marketing manager of the Business Unit (BU) that produces polystyrene (which is an input to making lightweight rigid foam). The current Demand/Supply balance, as measured by the ICIS price, is $800 per ton of polystyrene. The BU has 2 plants and can produce a total of 1800 tons. At full capacity utilization, the BU’s average variable cost equals $1300/t and its average total cost equals $1700/t.Plant 1 has a capacity of 600 tons and a marginal cost of $900/t. Plant 2 has capacity of 1200 tons and a marginal cost of $1500/t. Due to exit of one competitor, you expect next year’s polystyrene ICIS price to increase to $1200. 1. How much volume of polystyrene do you expect to produce next year, if any? 2. What is your expected contribution margin for next year? 3. What is your expected profit for next year?
TRUE OR false.. The firm should shut down its operations if the total revenue cannot cover the total variable cost
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