Answered: Why it is important for managers to be…

Why it is important for managers to be able to identify which costs are fixed, which are variable, and which are sunk? Explain.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Production And Costs

Section: Chapter Questions

Problem 6WNG

See similar textbooks

Related questions

Q: For an increase in output, average costs change by more in the short-run than in the long run, but…

A: Meaning of Cost: The term cost refers to the situation under which a firm occurs various expenses…

Q: Use the following information on a hypothetical short-run production function to answer questions…

A: The law of diminishing marginal returns states that, in a production process, the successive…

Q: efer to the graph. Which one of the following would cause a move from point d to point e along…

A: A cost curve is a graph representing production costs as a function of total amount produced in…

Q: A firm employs M workers per week and the length of the workweek at the firm is H Let MPM be the…

A: Profit is the difference between total revenue and total cost. In general, profit is maximized at…

Q: How would the long run total cost curve change if the price of capital increase? Please explain your…

A: Long run Total Cost (LTC) insinuates the base(minimum) cost at which given level of yield can be…

Q: Draw the short-run MC, AVC, and AC curves. Please use no less than 5 points for each curve. Label…

A: a. Below is the well labelled graph

Q: The Paunch Burger restaurant chain currently produces 250,000 units of output by using 2,400 units…

A: Answer - MRTS (Marginal rate of technical substitution) :- The rate by which one factor need to…

Q: Economics Complete the table below. (Round your answers to two decimal places.) Capital, Labor, K L…

A: Fixed cost remains same at all levels of output. Variable cost is the cost that changes as output…

Q: Explain fully the law of diminishing returns. Does this occur in the short run or the long run? How…

A: In economics, the short run is a time period where atleast one factor of production is fixed while…

Q: Questions: 1. Isoquants can be convex, linear, or L-shaped. What does each of these shapes tell you…

A: Iso-quant: It shows the combination of the factors of an economy that produce the same level of…

Q: Three managers of APISYONADO Company are discussing a possible increase in production who do you…

A: MR.NADO is correct as according to him the extra revenues from selling the additional perfume…

Q: How is it possible for households to have a negative savings rate and what has caused this negative…

A: Saving is the excess of income over consumption expenditure. S = Y - C

Q: Let c(x) be the cost of producing a product of x units. Given that c(x) follows the experience cost…

A: Experience curve is the known as Henderson's law which states that more the firm produces , firm…

Q: Economists describe short-run decisions as "constrained" decisions, while long-run decisions are…

A: The factors of production are the factors that are being used in the process of production by the…

Q: total revenue (TR) and total variable cost (VC) if the price is equal to the AVC

A: Relationship between TR and TVC 1. TR represents sum of MR and TVC represents Sum of MC Gross…

Q: Instructions: Click the buttons above the graphing window to show either production functions or…

A: Productivity in the following tables can be found out by dividing output by the number of workers.…

Q: Which of the following are short-run and which are longrun adjustments? a. Wendy’s builds a new…

A: Since you have posted a question with multiple subparts, we will solve the first three subparts for…

Q: F(Kt, Lt, At) Explain through example how diminishing marginal products can occur in the production…

A: Constant returns to scale means diminishing returns to factor. The second derivative of marginal…

Q: Suppose that during an economic boom labour costs rise by 100% and are expected to stay at that…

A: The expansion path depicts the lowest-cost labor and capital combinations that can be used to…

Q: What is sunk cost? Provide an example of a sunk cost. Why are such costs irrelevant in making…

A: Costs refer to the expenses which are made by the firms in the production of goods, and services.…

Q: As a firm hires more workers, holding capital and other factors constant, the marginal physical…

A: Answer is (a) the amount of other inputs each worker has to work with declines as the number of…

Q: For the following industries, state whether the long-run average cost curve has an extended range…

A: Returns to scale is the quantitative change in outputs of an industry or firm in response to an…

Q: if the ATC curve is rising, does that mean the MC curve must lie above it? Explain.

A: Marginal Cost: The sum of the total variable cost is the marginal cost because the fixed cost…

Q: Why does the marginal product of labor start to decrease after a certain number of workers are…

A: Marginal Product of labour basically means the change in total output, due to one unit change in…

Q: What is the difference between a feasible production plan in the short run and in the long run? Give…

A: Feasible production plan in the short run: In the short run, even though the firm is facing loss, it…

Q: X and Y are factors of production. They are used to make a fixed output, Z, of the product. The…

A: The main objective of a rational producer is to maximize profit by allocating its resources…

Q: true or false The closer an isoquant is to a straight line, the closer the inputs are to being…

A: An isoquant refers to a line that shows all the input combinations that yield the same level of…

Q: Determine whether each of the statement is true, false, or uncertain. If the statement is false or…

A: The diminishing marginal product of labor is a short-run phenomenon, which explains that after…

Q: Money cost and the real cost don't coincide"? Comment on this statement

A: There are a lot of costs involved while producing a good or service. Some are explicit costs like…

Q: Answer the following questions clearly in computer-typed print with Make sure you label your graphs…

A: The isoquant reflects the different consumption combination of two inputs (L and K) that a firm can…

Q: The Principle of Diminishing Returns Apply the principle of diminishing returns. 4.1 Consider the…

A: The Law of diminishing return, also known as the Law of variable proportion, operates in the short…

Q: What is the impact of a fall in productivity on costs. Explain further.

A: The primary aim of the business is to maximize the profit and reduce the cost. The efficiency of the…

Q: Is the managerial coordination that goes on inside a business firm independent of market forces?…

A: Managerial coordination refers to the activities and operations of a business firm starting from the…

Q: Explain what is meant by and what causes "Diminishing Marginal Product". Why is it only relevant in…

A: Marginal product refers to the increase in outpit resulting from employing additional units of…

Q: What do economists mean by "deminishing returns" to an input? What causes diminishing returns? Where…

A: Diminishing Returns It means when we employ one additional unit of variable factor then the marginal…

Q: What is sunk cost? Provide an example of a sunk cost.Why are such costs irrelevant in making…

A: A sunk cost is the cost that is already paid and is non-recoverable. An example is the fixed costs…

Q: A firm faces the following production function q = 100L0.6K0.6 The wage rate, w, is $4.00 and the…

A: A firm uses different combinations of factors of production such as labor and capital to produce…

Q: For an increase in output, average costs change by more in the short run than in the long run, but…

A: Average cost is the total cost per unit of output. AC=TCQ

Q: 1. What is the fixed input use in this production? 2. What is the variable input use in this…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: the envelope curve be tangential to the bottom of each of the short-run average cost curves? Explain…

A: In Economics, qualification is frequently made between the short-run and long-run. In the short-run…

Q: What is sunk cost? Provide an example of sunk cost other than one from the book and explain it. Why…

A: Cost is the expenses incurred by a person on acquiring any good or service. It is the payment done…

Q: Which of the following are short-run and which are longrun adjustments? IBM hires 200 more software…

A: Short run is a period when a distinction can be made between fixed costs and variable costs. It is…

Q: We can describe inputs as either fixed or variable. Thinking about a company that assembles cars,…

A: In the production process, some of the resources are considered as fixed while others are variable…

Question

Why it is important for managers to be able to identify which costs are fixed, which are variable, and which are sunk? Explain.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What is a long-run average cost curve?
What do economists mean by "deminishing returns" to an input? What causes diminishing returns? Where would one observe this principle at a job and the real world?
What is the difference between implicit and explicit costs? Why do economists include both implicit and explicit costs in their calculations of profit but accountants do not?
How can a managerial econmist help in operations of: (a) a service organization; (b) manufacturing; (c) an agricultural - based company.
if the ATC curve is rising, does that mean the MC curve must lie above it? Explain.
How would the long run total cost curve change if the price of capital increase? Please explain your answer intuitively and graphically. Not copy paste
When it comes to the question on how long the short run is (in the context of production and cost), economists say that the short run is. Calculated by multiplying price and quantity measured in days or weeks context dependent and is given by the time it takes to change the quantity of an input given by the time it takes for the management of a company to make decisions
"Money cost and the real cost don't coincide"? Comment on this statement
What factors account for a fall in the long-run cost curve?
Explain what is meant by and what causes "Diminishing Marginal Product". Why is it only relevant in the short run?
Discussion Question: Say that neither labor nor machines are fixed but there is a 50 percent quick-order premium paid for both workers and machines for their delivery in the short run. Once you buy them, they cannot be returned, however. What do your short-run marginal cost and short-run average total cost curves look like? Please do fast ASAP
Why might marginal product be increasing at lower levels of output and decreasing at higher levels of output?