PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Chapter 8, Problem 11SP
To determine
Identify the frozen dessert business that will have the lower marginal cost of production.
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The local newspaper has asked you (as a top economics student) to provide an industry analysis of hair stylists in Midtown. Here is what you've found so far:
1) There are 100 hair stylists in Midtown which all compete against one another for clients.
2) The market price for a hair styling is $20.
3) All firms in the market have a monthly overhead cost of $5,625 and a monthly variable cost that you've determined to be VC = $5q + $.01q2
The optimal amount of hair stylings given per month per firm is ___ and the monthly profits per firm are $___.
The table below presents the average and marginal cost of producing cheeseburgers per hour at a roadside diner.
Cheeseburger Production Costs
Quantity(burgers per hour)
Average Variable Cost (dollars)
Average Total Cost (dollars)
Marginal Cost (dollars)
0
—
—
—
10
$1.00
$6.60
$1.00
20
0.70
3.50
0.40
30
0.70
2.57
0.70
40
0.78
2.18
1.00
50
0.88
2.00
1.30
60
1.07
2.00
2.00
70
1.34
2.14
3.00
80
1.74
2.44
4.50
90
2.23
2.86
6.20
100
2.81
3.37
8.00
a. At a quantity of 40 cheeseburgers per hour, the average total cost of production is (Click to select) falling rising at a minimum and the marginal cost of cheeseburger production is (Click to select) falling rising at a minimum .
b. At a quantity of 60 cheeseburgers per hour, the average variable cost of production is (Click to select) falling rising at a minimum and the average total cost of cheeseburger production is (Click to select) falling rising at a minimum .
Bill runs a business that makes custom-printed towels. It will cost him $8 each to purchase and print on towels, and he will have to pay a rent of $1,700 per month for him workshop. Based on market research, Bill estimates that he can sell custom towels for $25 each.
a) Calculate the number of towels he needs to sell per month to break-even.
towels
b) Calculate the break-even in dollars (round off to the nearest cent).
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