# Economics

posted by .

1. Your roommate's long hours in chem lab finally paid off--she discovered a secret formula that lets people do an hour's worth of studying in 5 minutes. So far, she's sold 200 doses and faces the following average-total-cost schedule:
Q = 199 & ATC = \$199
Q = 200 & ATC = 200
Q = 201 & ATC = 201

If a new customer offers to pay your roommate \$300 for one dose, should she make one more? Explain.

Would the answer be yes because to produce one more would cost \$202 which is less than the \$300 the customer is willing to pay.

3. You go out to the best restaurant in town and order a lobster, you realize that you are quite full. Your date wants you to finish your dinner because you can't take it home and because "you've already paid for it" What should you do?

Isn't because I am full that the remaining amount of lobster is a sunk cost. So it is best to let it go and not eat it.

10. An industry currently has 100 firms, all of which have fixed cost of \$16 and average variable cost as follows:
Quantity / Average variable cost: (1/\$1),(2,\$2), (3,\$3), (4,\$4), (5,\$5), and (6,\$6)
As this market makes the transition to its long-run equilibrium, will the price rise or fall? Will the quantity demanded rise or fall? Will the quantity supplied by each firm rise or fall?

1) She should produce whenever Marginal Revenue > Marginal cost. MR=300. What is Marginal Cost?

if Q=199 and ATC=199 then Total Cost TC = 199*199=39601.
When Q=200,ATC=200 then TC = 40000, Thus MC=40000-39601 = 399.
When Q=201,ATC=201 then TC=40401. Thus MC=401.
Now, what do you think the roomate should do?

10) Good problem. First construct a marginal cost curve for a firm. (Same procedure as in 1 above).
Next, determine the break-even point for your firm. That is, at what price will the firm have zero net profits.

By my calculations, firms break even at P=\$8. At P=8, each of the firms will produce 4 units. So, total revenue = 4*8=32. AVC=4*4=16 and fixed costs=16.

Your question says nothing about the current (short-run) price. So, lets assume. If Price < \$8, then firms will be in a loss situation. Some will drop out, shifting the supply curve inward. Quantity demanded will fall, price will rise (to \$8).
If Price > \$8 then firms will enjoy an economic profit. More firms will enter (assuming they have the same cost structures). Supply shifts out, Price goes down, quantity demanded goes up, each firm's output will either fall are stay the same.

• Economics -

2. A company is considering building a bridge across a river. The bridge would cost \$2 million to build and nothing to maintain. The following table shows the company¡¯s anticipated demand over the lifetime of the bridge:

Price per crossing (\$) 8 7 6 5 4 3 2 1 0
Number of crossings (¡®000) 0 100 200 300 400 500 600 700 800

a. If the company were to build the bridge, what would be its profit-maximizing price? Would that be the efficient level of output? Why or why not?
b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss?
c. If the government were to build the bridge, what price should it charge?

• ytfk zxobayec -

dfoeimzcs hqlt tosk ubfdhl xhdrwzue gxufwmd hfiub

• Economics -

µØ·½

## Similar Questions

1. ### Maths

Carlos is training for the Olympics. His first training session lasted for one hour and he increases each training session by ten minutes every time. After fiteen sessions, how many minutes will be spend training?
2. ### Micoeconomics

Your roommate's long hours in the chem lab finally paid off- she discovered a secret formula that lets people do an hour's worth of studying in 5 minutes. So far, she's sold 200 doses and faces the following average total cost schedule …
3. ### Quantiative Methods

Western Family Steakhouse offers a variety of low-cost meals and quick service. Other than management, the steakhouse operates with two full-time employees who work 8 hours per day. The rest of the employees are part-time employees …
4. ### Microeconomics

I am on the chapter for monoplies. I need to calculate the total cost for the following question. I am not quite clear if I am to use the \$2 million that was paid to author to write the book to calculate the total cost, since the question …
5. ### Economics

Economics Production Schedule The owner of a car wash is trying to decide on the number of people to employ based on the following short-run production function: Q = 6L - 0.5L2, with the corresponding marginal product of labor equation, …
6. ### economics

A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units. The minimum average cost is …
7. ### Managerial Economics

George, the owner of a car wash is trying to decide on the number of people to employ based on the following short–run production function: Q = 6L – 0.5L2 Where Q = number of car washes per hour and L = number of workers. a) Generate …
8. ### MicroEcon

The market for apple pies in the city is competitive and has the following demand schedule: Price Quantity Demanded \$1 1,200 2 1,100 3 1,000 4 900 5 800 6 700 etc... 13 0 Each producer in the market has fixed costs of \$9 and the following …
9. ### Statistics

A comparison is made between two bus lines to determine if arrival times of their regular buses from Denver to Durango are off schedule by the same amount of time. For 51 randomly selected runs, bus line A was observed to be off schedule …
10. ### math

6. If each of eight biology classrooms is in use for 5 hours and 15 minutes per day, and total of 84 student experiments are done, how long does each experiment take on average?

More Similar Questions