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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Based on your answers to the WipeOut Ski Company in Exercise 7.3 , now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of Chapter 7, Problem 4SCQ, Based on your answers to the WipeOut Ski Company in Exercise 7.3 , now imagine a situation where the each.

a. What will be the company’s profits or losses?

b. How can you tell at a glance whether the company is making or losing money at this price by looking at average cost?

c. At the given quantity and price, is the marginal unit produced adding to profits?

A

To determine

Company’s Profit or losses.

Explanation

Given information:

Quantity Produced: 5 units

Selling Price: $25 each

Calculation:

Revenue= Quantity Sold X Selling Price

= 5 X $ 25

= $125

Total Cost = of 5 units from previous question is $130...

B

To determine

Whether the company is making or losing money at this price by looking at the average cost.

C

To determine

At a Given quantity and price, is the marginal unit produced adding to profits.

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