Refer to Scenario 1-2. Using marginal analysis terminology, another economic term for the incremental cost of producing the last 300 hats is marginal cost. explicit cost. Any of the above terms are correct. operating cost.
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Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats."
Refer to Scenario 1-2. Using marginal analysis terminology, another economic term for the incremental cost of producing the last 300 hats is
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- Suppose a cell phone manufacturer currently sells 10,000 cell phones per week and makes a profit of $3,000 per week. A manager at the plant observes, "Although the last 2,000 cell phones we produced and sold increased our revenue by $1,000 and our costs by $2,000, we are still making an overall profit of $3,000 per week so I think we're on the right track. We are producing the optimal number of cell phones." Show the information you can derive from the above statements. Show your steps.You are the manager of a small pharmaceutical company that received a patent on a new drug that enhancethe immune system three years ago. Despite strong sales (GH¢125 million last year) and a low marginal costof producing the product (GH¢0.25 per pill), your company has yet to show a profit from selling the drug.This is, in part, due to the fact that the company spent GH¢1.2 billion developing the drug and obtainingFood and Drugs Authority approval. An economist has estimated that, at the current price of GH¢1.25 perpill, the own price elasticity of demand for the drug is -2.5. Based on this information, what can you do toboost profits? Explain.You are the manager of a small pharmaceutical company that received a patent on a new drug that enhance the immune system three years ago. Despite strong sales (GH¢125 million last year) and a low marginal costof producing the product (GH¢0.25 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent GH¢1.2 billion developing the drug and obtainingFood and Drugs Authority approval. An economist has estimated that, at the current price of GH¢1.25 per pill, the own price elasticity of demand for the drug is -2.5. Based on this information, what can you do to boost profits? Explain.
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- Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5,000 bags of potato chips at the same total cost. Which of the following statements is true? Hint: If the level of output changes, only the variable costs will change. a.If both produce more, Kyle's costs will exceed Stan's costs. b.If both produce less, their costs will still be equal. c.If both produce more, their costs will still be equal. d.If both produce less, Kyle's costs will exceed Stan's costs.10. Problems and Applications Q10 An industry currently has 100 firms, each of which has fixed costs of $16 and average variable costs as follows: Complete the following table by deriving the total cost, marginal cost, and average total cost for each quantity from 1 to 6. Quantity Average Variable Cost Total Cost Marginal Cost Average Total Cost (Dollars) (Dollars) (Dollars) (Dollars) 0 16 1 1 2 2 3 3 4 4 5 5 6 6 The equilibrium price is currently $10. Each firm produces __________ units, so the total quantity supplied in the market is _________ units. In the long run, firms can enter and exit the market, and all entrants have the same costs as in the previous table. As this market makes the transition to its long-run equilibrium, the price will _______ , quantity demanded will ________ , and the quantity supplied by…Suppose the imaginary company of Roobek is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand’s total cost of production at several different quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 0 60 — — 1 160 2 220 3 270 4 340 5 450 6 630 On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC…
- Suppose the firm achieves total revenue of $1,000 by selling 150 units while facing total costs of $900. If the firm produces and sells 151 units, its total revenue is $1,005, and its total costs are $950. Should the firm produce and sell the extra unit? Group of answer choices yes, since marginal profit is positive yes, since profits are positive no, since marginal profit is negative no, since marginal profit is positive You have recently learned that the company where you work is being sold for $1,000,000. The company's income statement indicates next year's profits of $30,000, which have yet to be paid out as dividends. Assuming the company will remain a "going concern" indefinitely and the interest rate will remain constant at 7%, at what (constant) rate does the owner believe that profits will grow? (Hint: the price the owner was willing to pay is the present value of the firm's future cash flows) Group of answer choices 6% 5% 4% 4.5%A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $30,000 a year, and take over a restaurant space that he owns and currently rents to his brother for $24,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. Suppose the sushi bar’s revenue from the first year is $120,000. What is the chef’s economics profit? 14,000 -14,000 66,000 68,000Suppose that a firm's long-run average total costs of producing smart phones increases as it produces between 50,000 and 60,000 smart phones. For this range of output, the firm is experiencing