Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660819
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 10, Problem 3P
To determine
Shutdown point.
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Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $250. Her variable costs are $1,800 for the first thousand posters, $1,500 for the second thousand, and then $900 for each additional thousand posters.
a. What is her AFC per poster (not per thousand!) if she prints 1,000 posters?
What if she prints 2,000 posters?
What if she prints 10,000 posters?
b. What is her ATC per poster if she prints 1,000?
What if she prints 2,000?
What if she prints 10,000?
c. If the market price fell to 85 cents per poster, would there be any output level at which Karen would not shut down production immediately? Yes/No
Zippy is earning $25,000 per year working for Joe's Car Repair. He also has savings of $150,000, on which he is earning 10% annual interest. He decides to leave Joe's Car Repair to invest his savings in starting his own car repair business.
In the first year, Zippy's Speedy Car Repair ears revenues of $200,000 and has explicit costs of $100,000.
Zippy's economic profit (or loss) in the first year is $. (round your answer to the nearest dollar. )
Question 3 The current market price in a competitive industry is $15. Every firm in the industry operates a technology that implies costs described by the function C = 12.5 + 0.3Q2. In the future, the technology is expected to change, and the new cost function will then be C = 10 + 0.2Q2. How much profit is the typical firm making today and in the long run?
O. Profit is zero both today and in the long run.
O. Profit is 125 both today and in the long run.
O. Profit is 175 today and zero in the long run.
O. Profit is 250 today and 125 in the long run.
Chapter 10 Solutions
Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
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