MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 5, Problem 12PAA
To determine
To Check: The role of manager that has been done to maintain the job.
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Suppose a firm has an annual budget of $200,000 in wages and salaries,
$75,000 in materials, $30,000 in new equipment, $20,000 in rented
property, and $35,000 in interest costs on capital. The owner/manager
does not choose to pay himself, but he could receive income of $80,000
by working elsewhere. The firm earns revenues of $360,000 per year.
What are the annual implicit costs for the firm described above?
O $360,000
O $80,000
$160,000
$450,000
You've been hired by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day. The daily wage (per worker) is 100 ETB, and the price of the firm's output is 30 ETB. The cost of other variable inputs is 500 ETB per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You
know that the marginal cost of the last unit is 30 ETB. Should the firm continue to operate at a loss? Carefully explain your answer.
Suppose you manage a business that produces high-end dog food. The business produces 3,000 dog food cans per day, and can sell each can at $2.00/can regardless of how much is produced. Your firm currently employs 20 workers, each of whom earns $15/hour and work 8 hours per day. Inputs, like the meat for the food and the metal for the can, cost $1.00/can. Your overhead expenses, including rent, property taxes, insurance, etc., which does not vary with the number of cans produced, equals $250 per day.
a. (3) Calculate your company’s current daily profit.
You’re considering whether to hire additional workers to produce additional cans. Each worker would be paid $15/hr. and material costs remain constant at $1.00/can. You estimate the 21st employee would produce an additional 200 cans per day, and the number of additional cans from each additional worker would be decreasing by 40 (a 22nd employee could produce an additional 160 cans per day, a 23rd employee could produce an additional…
Chapter 5 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
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