Economics: Principles & Policy
14th Edition
ISBN: 9781337912679
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning US
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Question
Chapter 8, Problem 1TY
To determine
Impact of change in price on the quantity.
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Students have asked these similar questions
Suppose that the firm’s demand curve indicates that at a price of $10 per unit, customers will demand 2 million units of its product. Suppose that management decides to pick both price and output; the firm produces 3 million units of its product and prices them at $18 each. What will happen?
A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $20 per unit, what is the break even amount of units for technology A?
A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $20 per unit, what is the break even amount of units for technology A?
a.
70
b.
60
c.
50
d.
None - They would have to shut down
Suppose a firm is currently maximizing profit by producing 100 units of output per day. It is then
discovered that the firm owes $1,000 for a one-time tax violation that occurred a few years ago. The
firm now needs to pay the $1,000 to the government no matter what. How should the firm react to this
additional cost?
The firm should increase output in order to increase revenue enough to cover the additional cost.
The firm should continue to produce 100 units of output per day, as the $1,000 is a sunk cost and therefore has
no effect on production decisions.
The firm should shut down in the short run and start back up in the long run.
The firm should decrease output in order to decrease variable costs by $1,000.
Chapter 8 Solutions
Economics: Principles & Policy
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