This topic contains a solution. Click here to go to the answer

Author Question: The president of a company is told that the fixed costs next year will be higher than anticipated. ... (Read 34 times)

sjones

  • Hero Member
  • *****
  • Posts: 520
The president of a company is told that the fixed costs next year will be higher than anticipated. Even so he has told his operations managers that this should not affect their production levels. Comment on this statement.
 
  What will be an ideal response?

Question 2

Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.
 
  What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

todom5090

  • Sr. Member
  • ****
  • Posts: 328
Answer to Question 1

The statement is correct. Higher fixed costs won't affect the marginal or variable costs of the firm. The profit-maximizing production decision is predicated on equating marginal revenue and marginal cost. Neither of these change when fixed costs change.

Answer to Question 2

The price will fall and output will increase to the efficient level. The monopoly's economic profit will revert to the consumers as consumer surplus as the price falls and the quantity increases. The deadweight loss will be eliminated as output and the consumer surplus increase.




sjones

  • Member
  • Posts: 520
Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review


CAPTAINAMERICA

  • Member
  • Posts: 325
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

Human kidneys will clean about 1 million gallons of blood in an average lifetime.

Did you know?

Bacteria have been found alive in a lake buried one half mile under ice in Antarctica.

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

For a complete list of videos, visit our video library