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? |
bio industry
The ring-tailed lemur is the best-known of the Madagascar primates.
Francisco Goya, Saturn Devouring One of His Sons.
How many pounds of yeast must the manufacturer start with to obtain 550 lb at the end of 12 h?
When operating your own business, it is wise to know your cost of capital and that of the ...
Juan's Software Service Company is in a perfectly competitive market. Juan has total fixed ...