EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 8SPPA
To determine
Why Gap is closing its stores. Is it a long run decision or short run decision? Is it taking benefit of economies of scale?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Microeconomics
Q193515
Deadline passed
If the price (P) of maple syrup is $4.00 per can, average cost (AC) is $4.50 per can and average variable cost (AVC) is $3.00 per can, then to maximize profit or minimize loss the firm should:
Answer approved2$1
Will be moved to archive within about 9 hours.
Microeconomics
Q194159
4 hours 26 min
1. Briefly discuss two major differences between the theory of perfect competition and the theory of monopoly. 2. What reasons make the demand curve of a perfectly competitive firm completely horizontal? Only state.
3. Represent the information below in an appropriately labelled diagram with the relevant curves, and decide whether the firm should continue production or shut down in the short run, using calculations. A perfectly competitive firm produces 100 mugs to maximize its profit. The average total cost (ATC) is 13 taka per mug and the average fixed cost (AFC) is 4 taka per mug when the firm produces 100 mugs. The…
10. Read this excerpt from the October 18, 2022, Wall Street Journal.
KINDERHOOK, N.Y.—Golden Harvest Farms has grown from a small apple-growing operation when Doug Grout’s grandfather opened it after World War II, to a multipronged business that includes a retail stand, cider press, distillery, tasting room and barbecue restaurant.
But Mr. Grout said he sees a cloudier future for the business due to new state regulations that will require him to increasingly pay more overtime to the farmworkers who pick his apples in the coming years, raising one of his primary costs.
“We were looking to buy another orchard, and that whole thing is tabled,” said Mr. Grout, 52 years old, who co-owns Golden Harvest with his father, as he drove between rows of Honeycrisp trees. “We’re stepping away. You’re going to see farms go out of business. This is very shortsighted.”
For the apple market in New York, the new regulations will:
Cause supply to shift to the left, leading to higher prices and a…
Economics
IPCSB.52
A yoga studio has two big costs: rent and labor. They decide that they want to move to a location with lower rent and they adjust
the hours of their employees. Is this a short-run or long-run decision?
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
Short-run.
Long-run.
One cannot tell
Knowledge Booster
Similar questions
- It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss.arrow_forwardWhat is a long-run average cost curve?arrow_forward11. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: QQ equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) QQ = 100 QQ = 200 QQ = 300 QQ = 400 QQ = 500 QQ = 600 1 140 60 40 80 160 320 2 230 110 40 40 110 230 3 320 160 80 40 60 140 Suppose Ike’s Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike’s Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using .…arrow_forward
- Kelly is a clerk and she earns $80,000 per annum. She thinks her salary is too low and decides to start her own cake shop using her savings of $100,000, which earns an interest at 5% per annum. After one year, she earns an accounting profit of $80,000. What is Kelly’s economic profit? Show your calculations. Is Kelly better off running her own shop? Briefly explain.arrow_forwardYou have the following information about long-run total cost for the following firms: Quantity Arnold’s Apples LRATC Belle’s Bananas LRATC Cam’s Cantaloupes LRATC 1 120 33 42 2 140 72 68 3 160 117 98 4 180 168 132 5 200 225 170 6 220 288 212 7 240 357 258 Do any of these firms experience economies of scale? How do you know?arrow_forwardHw#4.pdf Page 2 of 3 Search 4. Bob produces flower pots for sale, which he designs and manufactures using 3-D printing technology. Bob rents a building for $30,000 per month and rents machinery for $20,000 a month. Those are his fixed costs. His variable cost per month is given in the accompanying table. Quantity of flower pots 0 VC $0 1,000 5,000 2,000 8,000 3,000 9,000 4,000 14,000 5,000 20,000 6,000 33,000 7,000 49,000 8,000 72,000 9,000 99,000 10,000 150,000 a) Calculate Bob's average variable cost, average total cost, and marginal cost for each quantity of output. b) There is free entry into the industry, and anyone who enters will face the same costs as Bob. Suppose that currently the price of a flower pot is $25. What will Bob's profit be? Is this a long-run equilibrium? If not, what will the price of a flower pot be in the long run?arrow_forward
- Economics Wendy decides to open her own business and earns 70,000 in accounting profit the first year. When deciding to open her own business she withdrew 20,000 from her savings which earned 2.5 percent interest took over a building that she owns and was renting to her friend for 12,500 a year. She also turned down three separate job offers with annual salaries of 30000 40,000, And 47,000 Determine Wendy’s total implicit costs? Explain in detail What is Wendy’s economic profit from running her own business ? Explain in detail show all calculationsarrow_forward11. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note:Q equals the total quantity of bikes produced by all factories.) Number of Factories 1 2 3 AVERAGETOTAL COST (Dollars per bike) 800 720 640 560 480 400 320 240 160 Average Total Cost (Dollars per bike) Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 po 320 800 320 400 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is 80 0 520 Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using 0 660 On the following graph, plot the three…arrow_forward11. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 260 330 400 1 2 3 Q = 200 200 240 280 Average Total Cost (Dollars per bike) Q = 300 = 400 160 160 200 200 160 160 = 500 280 240 200 = 600 400 330 260 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three short-run average total cost…arrow_forward
- Situation 21-1 Diane's Donuts will begin selling donuts next week. Diane figures that the average variable cost to make each donut will be constant at $0.30. She has already paid $20,000 for the donut-making machinery and one year's rent. Refer to Situation 21-1. What will Diane's total costs be if she sells 2,500 donuts in her first week and then goes out of business? a. $20,750 b. $30,500 c. $20,880 d. $10,950arrow_forwardUntil 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.arrow_forwardYou have the following information about long-run total cost for the following firms: Quantity Arnold’s Apples LRATC Belle’s Bananas LRATC Cam’s Cantaloupes LRATC 1 120 33 42 2 140 72 68 3 160 117 98 4 180 168 132 5 200 225 170 6 220 288 212 7 240 357 258 Do any of these firms experience diseconomies of scale? How do you know?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax