Which of the following is NOTa short run decision that a firm faces? (ר "If sales are not good, should I temporarily shut down and ride it out?" 2) "How many more workers should I hire if sales increase?" 3) "Should I lay off some workers if sales drop?" 4) "Should I rent a bigger office if sales increase?"
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- Consider the following data: equilibrium price = $12, quantity of output produced = 125 units, average total cost = $14, and average variable cost = $9. What will the firm do and why? Question 7 options: Shut down in the short run, because it is taking a loss of $250. Continue to produce in the short run, because price is greater than average variable cost. Shut down in the short run, because average variable cost is less than average total cost. Continue to produce in the short run, because firms are always stuck with having to produce in the short run.18. Which of the following are short-run decisions and which arelong-run decisions?a. General Motors decides to add a second shift to itsArlington, Texas production plant.b. Gotham Foods International chooses to exit the restaurantindustry to concentrate on its wholesale grocerysupply business. c. The Sahara Hotel and Casino in Las Vegas closes two of itsthree hotel towers in response to low demand.d. Tony Andretti, owner of Tony the Taxman, hires five newCPAs to work at his tax preparation business.e. German tool and appliance manufacturer Bosch enters theelectric bicycle industry in 2010.f. General Electric builds a new offshore wind manufacturingplant in the United Kingdom.A company in a competitive market has fixed costs of $200. A total cost curve is given in the table below. Given the data, answer the questions below. Output: 10 20 30 40 50 60 Total Cost:300 420 560 720 900 1100 a. Given the price is $20, what is the profit-maximizing output? What is the profit? b. Given the price is $20, what will happen in the long run? c. At the long-run equilibrium, what will the price be in the long run? What is the profit-maximizing output? What is the profit of the company? d. Prepare marginal cost schedule cost schedule for the firm.
- Which of the following are short-run and which are longrun adjustments? Wendy’s builds a new restaurant.Here are three fictional restaurants and their costs and revenues during March of 2020: Restaurant Fixed Costs Variable Costs Pandemic Revenues The Peach Pit 110,000 85,000 80,000 Gus' Galaxy Grill 75,000 75,000 100,000 Paddy's Irish Pub 50,000 70,000 95,000 a) For each restaurant, calculate their profits during this difficult month. b) Which restaurant, if any, earned a profit? c) Which restaurants were able to remain in business in the short run? Which were forced to shut down entirely? Why?For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? A stock market crash lowers people’s wealth. Batelco increases the prices of mobile services. Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?
- Suppose the market for the pain reliever aspirin is in long-run equilibrium at a price of $3 per bottle. New scientific research links aspirin with a reduced risk of heart disease. In the short run, what will happen to the price of aspirin? Explain using a diagram. In the short run, how will firms respond to the change in price described in part 1? What will happen to profits? Explain using the same diagram. Given the situation described in part 2, what can we expect to happen to the number of aspirin producers in the long run? What effect will the change in the number of producers have?Suppose there is a decrease in the demand for high-definition televisions. What effect might this change have on the short-run average total cost curve for this product? _____ a) A decrease. When demand decreases, the short-run average total cost falls. b) An increase. When demand decreases, the short-run average total cost increases. c) No change. Demand determines the final price but not the costs for the product.Short-run and long-run effects of a shift in demand Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 300 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in shrimp is causing bacterial infections to spread around the world. The CDC’s announcement will cause consumers to demand ______ shrimp at every price. In the short run, firms will respond by_____. Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the CDC’s announcement. (TABLE 1) In the long run, some firms will respond by ______ until _______. (TABLE 2) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is _____ in the long run. Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the…
- Why is it important for managers to understand the mechanics of supply and demand both in the short run and the long run? Give examples of companies whose business was either helped or hurt by changes in supply or demand in the market in which they are competing.What is the value of the average cost? If the price in the market of the perfect competitive firm is P9 Equilibrium quantity would be? Why?Economics At a price of $21 will the firm produce in the short run? If so, what is the profit or loss? Same questions as #1 except use a price of $34? Same questions as #1, except use a price of $45? From the information in the table, can you determine the short run supply curve? If so, what would it be? What would happen at the $45 price level in the long run, to profits, price, number of firms in the industry, assuming constant costs?