Q3. Starbucks Canada to Open 150 New Outlets, Biggest Expansion Ever Financial Post February 8, 2013Thanks in part to Target, Starbucks Canada will be undertaking the biggest expansion effort in its history this year, with plans toopen more than 150 new locations across the country. . The subsidiary of Seattle-based Starbucks Corp. will open outlets insidemany of the 124 Target locations opening in Canada in 2013 beginning next month – but the exact number is still a secret,Starbucks Canada president Annie Young-Scrivner said Friday. The growth is also a response to [the] company's successful bid totap into the Canadian palate with its burgeoning Blonde roast coffee in a way that it had not before, bringing a host of newcustomers through its doors, she said in an interview on Friday. ... After the first nine months, Blonde grew to represent 12% ofStarbucks Canada brewed coffee sales. Since the company began a sampling and marketing push last month in Canada, thelighter blend now accounts for 20% of those sales. Typically 38% of Starbucks Canada customers drink dark roast and 42% drinkmediu. roast, she said. "Some people thought our roast was too dark before. We had a lot of customers who would come to usfor their lattes, but would go somewhere else for their coffee. I think our mix will continue to shift more towards the Blonderoast.". (Source: Financial Post)Some salient points about the Starbucks expansion is given below:Starbucks can increase output by hiring more labour, orby increasing its plant size. Or it can both increase itsplant size and hire more labour.Starbucks can increase its plant size by either replacingan existing café with a larger one, or expanding the numberof cafés.The decision turns on comparing costs, and Starbucks hasfigured that it minimizes cost by expanding the number ofcafés and hiring more labour.The Average cost and Marginal Cost curves are given below in Figure 1:8.00아MCMC rises sharply andpulls up ATC as outputincreases above 1,000coffees per day6.00ATC4.002.602.00아5001,0001,5002,000Output (coffees per day)Cost (dollars per coffee) The Average total cost curves, the original ATC, and when an extra café is added ATC, is shown in Figure 2.8.00-By increasing plant size andhiring more workers, Starbucksincreases production at lowerATC along ATC,6.00ATC.ATC,4.00- LRAC2.00-1,0003,0002,000Output (coffees per day)Figure 2 Starbucks' Long-Run Cost CurveAnser the following questions :a. The following is the cost calculation of the Starbucks café. Fill in the blanks for A,B,C,D, and E. Show thecalculationsLaboursOutputTotal costMarginalAverage Total(Workers per(coffees per(dollars perCost (MC)Cost (dollarsday)day)day)(dollars perper coffee)coffee)A1000В10400A4.5C2010002600C2.6D30130034002.67EE401500В42.8F50160050003.13b. To expand its capacity, which is better for Starbucks: increasing the size of existing cafes or adding morenew cafes? Give proper reasons.Cost (dollars per coffee)

When firms operate in a market, they incur different costs. The total cost is the sum of fixed costs…

The Average total cost curves, the original ATCO and when an extra café is added ATC, is shown in Figure 2. 8.00- By increasing plant size and hiring more workers, Starbucks increases production at lower ATC along ATC, 6.00아 ATC ATC, 4.00- LRAC 2.00아 2,000 Output (coffees per day) 3,000 1,000 Figure 2 Starbucks' Long-Run Cost Curve Anser the following questions : a. The following is the cost calculation of the Starbucks café. Fill in the blanks for A,B,C,D, and E. Show the calculations Labours Output Total cost Marginal Average Total (Workers per (coffees per (dollars per Cost (MC) Cost (dollars day) day) day) (dollars per per coffee) coffee) A 1000 В 10 400 A 4.5 20 1000 2600 C 2.6 30 1300 3400 2.67 E E 40 1500 В 4 2.8 F 50 1600 5000 D 3.13 b. To expand its capacity, which is better for Starbucks: increasing the size of existing cafes or adding more Cost (dollars per coffee)

The Average total cost curves, the original ATCO and when an extra café is added ATC, is shown in Figure 2. 8.00- By increasing plant size and hiring more workers, Starbucks increases production at lower ATC along ATC, 6.00아 ATC ATC, 4.00- LRAC 2.00아 2,000 Output (coffees per day) 3,000 1,000 Figure 2 Starbucks' Long-Run Cost Curve Anser the following questions : a. The following is the cost calculation of the Starbucks café. Fill in the blanks for A,B,C,D, and E. Show the calculations Labours Output Total cost Marginal Average Total (Workers per (coffees per (dollars per Cost (MC) Cost (dollars day) day) day) (dollars per per coffee) coffee) A 1000 В 10 400 A 4.5 20 1000 2600 C 2.6 30 1300 3400 2.67 E E 40 1500 В 4 2.8 F 50 1600 5000 D 3.13 b. To expand its capacity, which is better for Starbucks: increasing the size of existing cafes or adding more Cost (dollars per coffee)

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 4PA

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Starbucks Canada to Open 150 New Outlets, Biggest Expansion Ever Financial Post February 8, 2013 Thanks in part to Target, Starbucks Canada will be undertaking the biggest expansion effort in its history this year, with plans to open more than 150 new locations across the country. … The subsidiary of Seattle-based Starbucks Corp. will open outlets inside many of the 124 Target locations opening in Canada in 2013 beginning next month — but the exact number is still a secret, Starbucks Canada president Annie Young-Scrivner said Friday. The growth is also a response to [the] company’s successful bid to tap into the Canadian palate with its burgeoning Blonde roast coffee in a way that it had not before, bringing a host of new customers through its doors, she said in an interview on Friday. … After the first nine months, Blonde grew to represent 12% of Starbucks Canada brewed coffee sales. Since the company began a sampling and marketing push last month in Canada, the lighter blend now…
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Until recently, Mark worked as a financial advisor, earning $65,000 annually. Then he inherited a piece of commercial real estate that had been renting for $14,000 annually. Mark decided to leave his job and operate a sea food restaurant in the space he inherited. At the end of the first year, his books showed total revenues of $300,000, and paid a total cost of $200,000 for food, utilities, cooks, and other supplies: Show all your work including formulas learned to support your answer for each of the following: A) Calculate his explicit costs: B) Calculate his implicit costs. C) Calculate his accounting profits. D) Calculate his economic profits.
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Wells Fargo was the darling of the US banking industry, with some of the highest returns on shareholders’ equity and increasing stock prices. Top management applauded the company’s lead in “cross-selling”, or the sale of additional products to existing customers. “Eight is great”, which means eight Wells Fargo products for every customer, was the CEO John Stumpf’s favorite saying. In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2 million unauthorized customer accounts. It soon came to light that the pressure on employees to hit sales targets was too intense with hourly tracking, pressure from supervisors to engage in unethical behavior and a compensation system based heavily on bonuses. Wells Fargo also confirmed that it had fired over 5,300 employees over the past few years related to unethical sales practices. CEO John Stumpf claimed that the scandal was the result of a few bad employees who did not honor the company’s values…
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In 1939, the box office records set by Gone with the Wind and The Wizard of Oz proved to Hollywood studios that investing in Technicolor was worth every penny. Nevertheless, a reversal of fortune hit the film industry as the United States entered World War II. Wartime shortages made celluloid nitrate more costly, so Hollywood studios reverted to primarily black and white. The few Technicolor musicals released only recovered their production costs. The graph shows Metro-Goldwyn-Mayer's (MGM) production of Technicolor movies before World War II. Modify the graph to describe the wartime period for MGM. Assume that nothing changes except the items discussed in the question.