Author Question: Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. (Read 3543 times)

j.rubin · **on:** Oct 8, 2019

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. Table 12-5 shows the firm's cost schedule.

Table 12-5

Quantity (cases)	Variable Cost	Total Cost	Marginal Cost	Average Variable Cost	Average Total Cost
0	$0	$76
1	30	106
2	50
3		134
4		140
5		160
6	114
7	150
8	190
9		316

Use the table to answer the following questions.

a.	Complete Table 12-5 by filling in the blank cells.

b.	Werner is selling in a perfectly competitive market at a price of $40. What is the profit maximizing or loss-minimizing output?

c.	Calculate the firm's profit or loss.

d.	Should the firm continue to produce in the short run? Explain.

e.	If the firm's fixed costs were $30 higher what would be the profit-maximizing output level in the short run? Indicate whether the output level will increase, decrease, or remain unchanged compared to your answer in b.

f.	Suppose fixed cost remains at $76. If the price of three-ring binders falls to $20 what is the profit-maximizing or loss-minimizing output?

g.	Calculate the profit or loss. Should the firm continue to produce in the short run? Explain your answer.

h.	Suppose the fixed cost remains at $76. What price corresponds to the shut-down point?

i.	Suppose the fixed cost remains at $76. What price corresponds to the break-even point?

joshbk44 · **Reply #1 on:** Oct 8, 2019

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Author Question: Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. (Read 3543 times)

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