Suppose that firm 1 is a restaurant, whose costs are ingredients, staff and space. Ingredientsand staff are paid for weekly and staff can be hired or fired at will. The rental for the space is aone year lease, to move out of this space and into a smaller or larger one would take at leastone year.Firm 2 is a door-to-door sales firm where the costs are inventory and staff. Both are paid everytwo weeks, and staff can be fired or fired at will (but must be paid for the current two weeks)while inventory can be bought or sold within a week.Is one month within the "short run" for firm 1? Is one month within the "short run" for firm 2?Explain your answer.

TC(total cost) is the sum of TFC(total fixed cost) and TVC(total variable cost). TVC is the cost on…

Answered: Suppose that firm 1 is a restaurant,…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section7.5: Long-run Production Costs

Problem 1YTE

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Suppose that firm 1 is a restaurant, whose costs are ingredients, staff and space. Ingredients and staff are paid for weekly and staff can be hired or fired at will. The rental for the space is a one year lease, to move out of this space and into a smaller or larger one would take at least one year. Firm 2 is a door-to-door sales firm where the costs are inventory and staff. Both are paid every two weeks, and staff can be fired or fired at will (but must be paid for the current two weeks) while inventory can be bought or sold within a week. Is one month within the “short run” for firm 1? Is one month within the “short run” for firm 2? Explain your answer.

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